Profitability determinants of savings and loans companies in Ghana

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Profitability of banking industries are reliant on various variables which are typically factors exuding from both internal and external sources. The internal determinant factors are broadly impacted by the choices of the board and planned activities of the organization. The external determinants on the other hand are those variables which are not impacted by the choices and strategies of the board but pose influence from various events outside realm of the business. The main objective of the present study was to investigate into the profitability determinants of Savings and Loans (S&L) companies in Ghana with a focus on S&L Companiesin the Kumasi metropolis. The study adopted quantitative research approach. The study used OLS models and secondary data from 9 S&L companies. Moreover, the study revealed that Loan to Deposit ratio, liquidity ratio, inflation rate and exchange rate were significant determinants of profitability of using ROE as a parameter. Moreover, the study revealed that inflation, exchange rate, and interest rate were significant determinants of the profitability of the focused S&L companies using ROA as indicator. The study concludes that loan to Deposit ratio, liquidity ratio, inflation rate and exchange rate were significant determinants of profitability among servings S&L companies in Ghana. The study recommends the need to make good use of the company’s resources to attract more vibrant investors. The results from the study confirm the assumptions of RBV on the value of the company's resources, particularly its sales and marketing staff .Again, the study recommends that S&L companies in Ghana need to upgrade their marketing strategies by using the latest and most advanced e-marketing technologies to expand their technological capabilities. S&L companies need to renovate their services through online and mobile accessibility to inform the youth about good things from S&L and engage them.
A thesis submitted to the department of accounting and finance, school of business, Kwame Nkrumah university of science and technology in partial fulfilment of the requirements for the award of the degree of master of science in accounting and finance