Browsing by Author "Oku, Barbara Naa Ayeley"

Now showing 1 - 1 of 1
  • Thumbnail Image
    Item
    A three-stage DEA analysis and a black-box approach of the performance of commercial banks in Ghana : an evaluation of efficiency, competition and profitability
    (Stellenbosch : Stellenbosch University, 2024-12) Oku, Barbara Naa Ayeley; Stellenbosch University. Faculty of Economic and Management Sciences. University of Stellenbosch Business School.; Aziakpono, Meshach
    ENGLISH SUMMARY: This thesis measures the efficiency of banks, ascertains the determinants of bank efficiency, and evaluates the relationship between efficiency, competition, and profitability of 18 commercial banks in Ghana from 2008 to 2019. The first empirical paper estimates and compares efficiency scores using both the black-box and the three-stage dynamic network DEA models. Both models incorporate a slack variable and bootstrap technique, with the dynamic network DEA model measuring efficiency of the deposit mobilisation, intermediation and revenue generation activities of banks in Ghana. The results show that commercial banks in Ghana are inefficient, with efficiency scores estimated by the dynamic network model being significantly lower than scores measured by the black-box model. The commercial banks are also most efficient in intermediation and least efficient in revenue generation. The second empirical chapter uses both the truncated bootstrap and the Tobit regression models to determine the impact of internal and external factors on the efficiency scores measured by the three-stage network dynamic DEA model. Results show that Capital Adequacy Ratio (CAR) and Non-Performing Loans (NPL) ratio have a significant negative impact on production and intermediation efficiencies while liquidity ratio has a negative and positive impact on production and intermediation efficiencies respectively. Inflation rate also has a negative effect on production efficiency and size, a significant positive impact on both production and intermediation efficiencies. ROA, OC/OI and inflation rate positively affects the revenue generation processes of commercial banks assessed, while foreign ownership is seen to be detrimental to revenue generation. To ascertain the impact of competition on bank efficiency, the Boone indicator is used to measure competition. Banks in Ghana are competitive for all the years assessed using the Boone Indicator and when regressed on the efficiency types, the study observed a positive association between competition and all the types of efficiencies measured. The positive relationship between revenue generation efficiency and competition however does not yield a significant observation, indicating a lower persistence in profits across the industry as banks are unable to earn abnormal profits. The final empirical chapter uses both the efficiency– profitability matrix and the GMM regression model to assess the impact of the efficiency scores on profitability measures (ROA and ROE). Using the GMM model, all three efficiency types largely have positive impacts on both ROA and Return on Equity (ROE). The study also found that foreign ownership has a significant impact on ROA, while liquidity ratio and competition have a negative and a positive impact on ROE respectively. With the efficiency– profitability matrix, foreign-owned banks are largely classified in the high profitability, high-efficiency quadrant (Stars or Lucky), while domestic banks were mostly categorised under the low profitability, low-efficiency quadrant (Unlucky or Underdogs).