Abstract:
This study examined the impact of recapitalization on the performance of Universal
banks in Ghana using profitability and liquidity ratios as the performance indicators.
The study is based on samples of Fourteen (14) out of the 23 licensed commercial
banks which were in existence as at 2010 and were able to meet the 2018 minimum
capital requirement of GHS 400 million. The study measured the impact of
recapitalization by comparing three years’ profitability and liquidity performance of
licensed commercial banks against five years’ performance of these banks after the
2013 recapitalization starting from 2010 to 2017. The study adopted the t-test of
equality of means and multiple regressions to find the impact on the profitability and
liquidity of banks. The first finding concludes that, there was no significant
difference between the mean ROE before the recapitalization and the mean ROE after
the recapitalization exercise. On the other hand the second finding concludes that, the
mean liquidity status of banks before recapitalization is significantly different from
that of after recapitalization. The study concludes that recapitalization exercise helps
increase liquidity of banks significantly but the ROE is was insignificant. The study
recommends that Bank of Ghana should not undertake recapitalization exercise with
the motive of increasing banks profitability but should find other innovative ways of
making banks more profitable since recapitalization only enhances liquidity status of
banks, but does not have any significant effect on banks profitability, so banks can
increase their capital by issuing more shares to the public to avoid liquidity
challenges.
Description:
A dissertation in the Department of Applied Finance and Policy Management,
School of Business, submitted to the School of Graduate Studies in partial
fulfillment of the requirements for the award of the degree of
Master of Business Administration
(Finance)
In the University of Education, Winneba
