Effects of bank recapitalization on bank performance and bank risk
Date
2020-05
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Abstract
Increasing the minimum capital requirement of banks is a major bank policy reform tool
used by the Bank of Ghana (BOG) to prevent bank insolvency and ensure robustness of
the Ghanaian banking sector. The existing literature shows that increasing bank capital can
be beneficial in different contexts. But very few of that literature focuses specifically on
African countries and other developing economies. This research was to determine how
bank recapitalization affects bank performance and bank risk. Based on the literature on
the subject, the major variables used in this study were return on equity, capital adequacy
ratio, return on assets, net interest margin and bank risk.
This study used the t-test of means as well as panel regressions to test the hypothesis stated
in the paper. The findings revealed that bank recapitalization positively affects bank
performance; this is consistent with the empirical literature. In determining the effect on
bank risk taking on the other hand, the t-test of means revealed a negative effect while the
regression showed a positive effect.
Description
Undergraduate thesis submitted to the Department of Business Administration, Ashesi University, in partial fulfillment of Bachelor of Science degree in Business Administration, May 2020
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Keywords
bank recapitalization, Ghana, Bank of Ghana, bank risk, bank performance