Commercial Bank and Microfinance: does integration matter? A case study of HFC Bank

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March, 2016
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This study examines the performance of HFC Bank Limited within the period which it adopted Boafo microfinance as its subsidiary. The study sought to answer the question, does integration matter? Various performance indicators are used to measure the performance of the Bank before and after integration. Quarterly frequency consolidated data from 2003Q1 to 2015Q4 was used to estimate determinants of performance using net profits as the performance indicator. A dummy variable is used to measure the effect of integration on the Banks performance. Applying the ARDL estimation technique, Result from the ARDL estimates revealed that return on capital employed, gearing ratio and return on equity were the main determinants of net profits in the long-run. The results showed that integration had positive impact on the Banks performance in the short-run and negative impact on the Banks performance in the long-run. It is recommended that, the Bank take measure that will increase its revenue while reducing its cost of operations.
A thesis presented to the Department of Economics, College of Humanities and Social Sciences In partial fulfillment of the requirement for the degree of Master of Science in Economics,