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Evaluating Banking Profit Performance in Ghana during and post Profit Decline: A five Step Du-Pont Approach

Emerging markets journal, 2015-11, Vol.5 (2), p.29-40 [Peer Reviewed Journal]

Copyright University Library System, University of Pittsburgh 2015 ;ISSN: 2159-242X ;ISSN: 2158-8708 ;EISSN: 2158-8708 ;DOI: 10.5195/emaj.2015.79

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  • Title:
    Evaluating Banking Profit Performance in Ghana during and post Profit Decline: A five Step Du-Pont Approach
  • Author: Kusi, Baah Aye ; Ansah-Adu, Kwadjo ; Agyei, Albert
  • Kızıl,Cevdet
  • Subjects: Bank assets ; Banking industry ; Banks ; Du-pont Model, Operating Profit Margin, Asset Turnover, Leverage, Interest burden, Tax Effect ; Equity ; Financial leverage ; İktisat & İşletme & Finans ; Maliye & Muhasebe & Vergi ; Profit margins ; Profitability ; Ratings & rankings ; Regression analysis ; Return on equity ; Stockholders
  • Is Part Of: Emerging markets journal, 2015-11, Vol.5 (2), p.29-40
  • Description: In this study we aimed at three objectives. First, identify and rank banks based on a composite score comprising of all five du-pont variables. Second, we identify variables in the five step du-pont set up that are most likely to influence bank ROE during and post profit declining periods. And third, we estimate a model to capture the variables that drive bank ROE during and post profit declining periods. We first establish from our rankings that, foreign banks in Ghana performed better during profit declining periods while the local banks performed better in post profit decline periods using the top ten banks as a benchmark in both periods. Employing Pearson correlation coefficients matrix, we recognized that operating profit margin, asset turnover and leverage were most likely to influence bank ROE in both time periods. We further employ OLS regression and find that bank ROE was impacted by operating profit margin and leverage during profit declining periods and post profit decline while tax effect added up in post profit declining periods.
  • Publisher: Pittsburgh: University of Pittsburgh
  • Language: English
  • Identifier: ISSN: 2159-242X
    ISSN: 2158-8708
    EISSN: 2158-8708
    DOI: 10.5195/emaj.2015.79
  • Source: AUTh Library subscriptions: ProQuest Central
    DOAJ Directory of Open Access Journals
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