Department of Banking and Finance
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Item Reinsurance and Financial Performance of Non-life Insurance Companies in Ghana(Management and Labour Studies, 2021) Andoh, C.; Yamoah, S.A.The study examines how premiums ceded to a reinsurer affect the profitability of non-life insurance companies in Ghana. Secondary data on reinsurance ceded, combined ratio, assets, liabilities, and return on assets for 20 non-life insurance companies over the period 2008–2018 were sourced from the National Insurance Commission whilst interest and exchange rate variables were obtained from the Bank of Ghana. A panel regression model was employed for the analysis of the data collected. The results show that purchasing high levels of reinsurance alone does not affect the profitability of non-life insurance companies, but the combined effect of reinsurance and solvency ratio significantly impacts their profitability. Managers of non-life insurance companies in Ghana should increase their ability to repay all financial obligations in the short, medium, and long term in combination with reinsurance. This will enable insurers to stabilize growth, earn profits, and meet their obligations to policyholders in a timely fashion.Item Financial globalization and institutions in Africa: the case of foreign direct investment, central bank independence and political institutions(Journal of Institutional Economics, 2020) Agoba, A.M.; Agbloyor, E.; Gyeke-Dako, A.A.; et.alIn this paper, we examine the bi-directional relationship between financial globalization (proxied by foreign direct investment (FDI) flows) and economic institutions (proxied by central bank independence (CBI)) taking into consideration the role of political institutions. We test our argument on a sample of 48 African countries (1970–2012) using a two-step System Generalized Methods of Moments, with collapsed instruments and Windmeijer robust standard errors. Using two proxies for CBI, the study finds that while legal CBI does not have a significant impact on FDI, high central bank governor turnover rates have a significantly negative impact on FDI inflows. However, higher levels of political institutions significantly enhance the impact of legal CBI on FDI inflows, and dampen the impact of high central bank governor turnover rates on FDI inflows. The study also shows that higher FDI inflows have a significantly positive impact on both legal and de facto CBI. This impact is accelerated in countries characterized by higher levels of political institutions.Item Fiscal rules, fiscal performance and economic growth in Sub‐Saharan Africa(African Development Review, 2021) Nabieu, G.A.A.; Bokpin, G.A.; Osei, A.K.; Asuming, P.O.Over the past four decades, many economies have striven to find permanent solutions to persistent increases in public deficits and deterioration of growth. For most economies, the solution to this problem was the adoption of fiscal rules. This paper presents empirical evidence on the effects of fiscal rules on fiscal performance and economic growth using a dataset of 43 countries in Sub‐Saharan Africa over 27 years. The study applies simultaneous equation models to determine the relationship between performance and growth in the public sector and also to avoid structural equation and endogeneity biases. The results show that fiscal rules significantly foster fiscal performance and decelerate growth. The study further finds the expenditure rules to be most effective in influencing fiscal balance and economic growth. The robust estimates further confirm that expenditure rules and government spending efficiency are necessary for promoting fiscal outcomes and economic growth. The study recommends the implementation of more revenue rules, debt rules, and balance budget rules to ameliorate the negative effects of government spending on economic growth. In addition, Sub‐Saharan African economies should carefully consider the rules applied to government spending since fiscal rules on productive spending will impede economic growth.Item Stock Market Reaction To The Recent Banking Reforms: Evidence From The Ghana Stock Exchange.(University Of Ghana, 2020-06) Azina-Nartey, K.N.This study examines the reaction of the Ghana Stock Exchange to the recent banking reforms and tests the semi-strong form efficiency of the GSE. Daily stock returns of listed companies and market returns consisting of both GSE composite index and GSE financial stock index are analyzed for all listed companies and listed financial institutions respectively. It employs event study methodology and cross-sectional regression. Market model is used in this study. Evidence is found of a reaction in the GSE to the banking reforms. On the event date, which is the announcement of the increase in the minimum capital requirement of banks, positive returns were made by investors. The reason for this reaction could be as a result of high anticipation among the investors that the recapitalization exercise would boost the financial system. This resulted in the demand of shares to rise during this period ensuing in more investors buying shares than selling thereby causing stock prices to rise. Investors who held shares during this period earned positive returns on their investment. The positive impact on share prices could also be attributed to banks issuing shares to raise the extra capital and investors buying those shares thereby giving rise to an increase in the demand of shares triggering share price to increase. Additionally, in the cross-sectional regression, the Market model shows a positive relationship between Cumulative Abnormal Returns and Abnormal Returns for both GSE CI and GSE FSI. The upward movement of Cumulative Average Abnormal Returns represents investors earning positive returns. The prevalence of significant abnormal returns infers that some investors were able to spot mispriced shares springing from inadequate circulation of information in the stock market and earn abnormal returns by taking either a short position or long position. This should not have been the case in an efficient market which would have limited the occurrence of some investors gaining. In addition to that, some investors made significant abnormal returns even days after the event date. Generally, from the results, the Ghana Stock Exchange is found to be inefficient in the semi-strong form. The study recommends that regulators should be cognizant of the impact of their policies on the stock market in order to improve liquidity in the Ghanaian stock market. Keywords: Banking reforms, Bank recapitalization, Semi-strong form market efficiency, Event study, Market model, Cross-sectional regressionItem The Impact Of Income Inequality On Economic Growth In Sub-Saharan Africa(University Of Ghana, 2021-12) Brehini, E.The main focus of this research is to examine the impact of income inequality on the economic growth using the Palma ratio and Gini index. The scope of the study is Sub-Sahara African countries. The two-step System Generalized Method of Moment (GMM) estimator was used in analyzing secondary panel data of 47 SSA countries spanning from 2000-2018. The Palma ratio and Gini coefficient were used as a measure for income inequality. After measuring the effect of unequal access to finance, unequal access to the labour market, and unequal access to education on income inequality, the outcome of the study revealed that, unequal access to finance had a positive and significant effect on the income inequality, unequal access to the labour market had a positive and significant effect on income inequality and unequal access to education also had a positive effect on income inequality. Also, the study found that government expenditure and fertility rate had significant and mitigating effect on income inequality. Population growth rate had negative and significant effect on income inequality. In measuring the effect of income inequality on economic growth, the result revealed that, income inequality had a negative and significant effect on economic growth. Furthermore, unequal access to finance, unequal access to the labour market, and unequal access to education negatively and significantly affected economic growth. Government expenditure and fertility rate had negative and significant effect on economic growth. The study recommends that much attention be given to unequal access to finance, labour market, and education because of their association with income inequality and economic growth. They tend to increase income distribution disparities and lower the economic growth of Sub-Saharan African countries. Keywords: Income Inequality, Economic GrowthItem Assessing The Multi-Directional Efficiency Analysis Of Ghanaian Insurers In The Presence Of Undesirable Output(University Of Ghana, 2022-01) Addo, D.A.A.Insurance contributes to a country’s economic growth and development. However, despite the plethora of insurance efficiency studies in literature, there are very few insurance efficiency studies in Ghana. Besides, insurance penetration is yet to grow significantly in Ghana, even though various reforms have been enacted to increase insurance penetration and insurance efficiency in Ghana. This study seeks to evaluate the aggregated and disaggregated efficiencies of insurers in Ghana over a sample of 30 insurers from 2008 to 2019, using the non-oriented non-radial multi-directional efficiency analysis and to investigate the impact of competition, leverage, size, solvency, profitability, insurer type and underwriting risk on MEA insurance efficiencies using robust econometric models. The study data was obtained from the audited financial reports submitted to the NIC. The results confirmed the distortions in insurance efficiency assessment when undesirable outputs are excluded from insurance efficiency estimation. Among the insurer variables, investment income was identified as the worst performing output variable, reducing the overall performance of insurers. Claims was identified as the best performing variable followed by labour. Among the insurance groups, life insurers were observed to be performing significantly well on its aggregated and disaggregated efficiencies than the non-life insurers. Finally, the previous year’s overall performance of insurers and the level of competition were identified as the determinants of MEA insurance efficiency in Ghana. The inclusion of claims as an undesirable in insurance efficiency assessment enables insurance regulators identify the true efficiency levels of Ghanaian life and non-life insurers. Key words: Claims, Insurance, Multi-Directional Efficiency Analysis, Second-Stage Analysis, Undesirable Output.Item Trade Mis-Invoicing And Abusive Transfer Pricing In Ghana’s Commodity Sector(University Of Ghana, 2022-07) Alu, A.A.This thesis contributes to the limited empirical analysis of the volumes of Illicit Financial Flows (IFFs) through trade mis-invoicing recorded in exports from Ghana. The thesis examines the volumes of illicit financial flows through trade mis-invoicing in five top export commodities of Ghana, namely: gold, cocoa beans, cocoa paste, bauxite, and manganese. It answers the questions of what the value chains and the risks for IFFs for those commodities are, how much trade mis-invoicing there is in these important export commodities and what the determinants for trade mis-invoicing are in those commodities. The study uses the Partner Country Trade Gap (PCTG) method to measure trade mis-invoicing with macro macro-level statistics from the UN COMTRADE Database as an initial step to determine the presence of trade mis-invoicing, followed by the Price Filter Method, which has been shown to provide more accurate estimates of IFFs due to the use of transaction transaction-level data. The thesis employs transaction-level data from the Customs Division of the Ghana Revenue Authority in generating the estimates of trade mis-invoicing for the Price Filter Method. The study ends with a regression analysis of the determinants of IFFs in the selected commodities. The value chain analyses of the commodities show that risks for IFFs arise mainly from transfer pricing due to multinational firms’ international trade operations. Other risk factors include artisanal, small-scale, and informal firms, regulatory infrastructure for verifying export valuation and transit trade from neighbouring countries. The estimates of trade mis-invoicing generated using the transaction level data from Ghana Customs with the price filter methods indicate that: 18.87% of bauxite exports, 11% of gold exports, 7.2% of cocoa paste exports, 1% of cocoa bean exports and 0.65% of manganese exports were undervalued while 0.2%, 0.9% 3.2%, 4.7% and 2.4% of gold, cocoa beans, cocoa paste, bauxite and manganese exports respectively were over-valued from 2011 to 2017. Overall, the results indicate the presence of trade mis-invoicing in Ghana’s commodity exports. In analyzing the determinants of trade mis-invoicing in the selected commodities, the study finds that for undervaluation, GDP growth, Current Account Balance and the Exchange Rate have some influence while the Current Account Balance, Inflation, Tax Differential, GDP growth, Transfer Pricing Risk and Transfer Pricing Rank have some influence in the overvaluation observed. The study has the following policy implications. First, it recommends that policymakers need to prioritize the development of institutional expertise to map, control and block the sources of the resulting tax base erosion as a result of trade mis-invoicing. Second, there is a need to improve data collection capacity of the various institutions engaged in the export of these commodities, greater co-operation among the various institutions in these sectors to reconcile data collected and constant skills improvement of personnel of these units. Finally, information and communication technology tools, especially computers, relevant software and access to critical databases also need to be upgraded to match those of the private sector actors in order to ease tax assessments and payments tracking.Item Disillusionment And Survival In African Migration Literature: A Study Of Okey Ndibe’s Foreign Gods, Inc. And Unoma Azuah’s Edible Bones.(University of Ghana, 2020-10) Brobbey, G.The phenomenon of human migration, as Marie McAuliffe and Marfin Ruhs (2017) agrees, “stretches back to the earliest periods of human history” (1). Human migration in the modern world has been massively enhanced by the ease of mobility due to the massive advancements in transport technology. People tend to migrate from one part of the globe to another where they hope to achieve better socio-economic life, or where they can be free from persecution and conscription. The compelling phenomenon of migration have found expression in African literature of the past and the present. This thesis analyses the experiences of African migrant characters in Okey Ndibe’s Foreign Gods, Inc. and Unoma Azuah’s Edible Bones. The disillusionment of the migrant characters as well as their strategies of survival forms the main stay of the study. Drawing on the conceptual framework of the new African diaspora, this study focuses on the diasporic experiences of what Ali Mazrui (2001) calls “the diaspora of colonialism”, Africans who voluntarily migrate to the United States of America. The study shows that creative writers do provide important insights into the conditions of African migrants in the West. From the analysis in this study, one realizes that the issues of unemployment, racism and the difficulty of acquiring legal documents to live and work in the United States stand out as part of the major causes of disillusionment among African immigrants. Both writers present return migration as a better option than chasing after an American dream of success which, like a mirage, is endlessly shiftingItem Assessing The Impact And Challenges Of Mobile Money: A Case Study Of University Of Ghana(University of Ghana, 2019-07) Addo, G.A.N.The significant role technology plays in boosting societies’ development cannot be overlooked. Mobile phone has been recognized as an important technology that has an impact on the lives of its users and the country at large. Mobile money service is one of the innovative products available to users of mobile phones. Accordingly, students find joy in using mobile phones due to its usefulness when it comes to retrieving information, and recently, the usage of mobile money. Against this background, this study analyzed the impact and challenges of mobile money use among students in the University of Ghana. The study obtained data solely from primary sources using questionnaires and semi-structured interviews to capture information from four hundred (400) students. Both descriptive analysis and the Person’s Moment Correlation Analysis were carried out to analyze the data. The result revealed that “perceived ease of use” of the mobile money service is the key factor that drives the use of the service among students in the University of Ghana. Thus, saving some money on your mobile money wallet is not only safe, but very convenient as well. Also, it has been shown that all the correlation coefficients on the impact of mobile phone use on savings, expenditure and safety were positive and significant, with savings having the greatest impact. Furthermore, majority of the students think that the main challenge with the mobile money service is the individuals’ preference in using cash for the payment of goods and services instead of mobile money. Finally, the findings from this study have managerial implications: network service providers need to sensitize their public education activities on how mobile money technology operates and its usefulness. Also, a system upgrade can ensure that their mobile money system is reliable for subscribers and make using the system convenient.Item Factors Influencing Liquidity Of Banks Listed On The Ghana Stock Exchange(University of Ghana, 2019-07) Adu, F.The conduction of this study involves regressing some specific external and internal factors on the dependent liquidity function which is, liquid assets to the total asset (LIQ) for the 11-year period from 2007-2017 of 8 Ghanaian banks listed on the stock exchange. Two separate analyses, fixed effect, and random effect panel regressions were conducted during the analyses of the study with the Hausman test performed to choose the best among the two. The result showed that bank size is the only bank-specific variable that positively affects liquidity at 5% significant level whilst capital adequacy, profitability, management efficiency did not show any significant impact on liquidity. In addition, inflation rate, exchange rate, GDP and unemployment significantly influenced liquidity, though inflation and GDP exhibited a positive impact whiles exchange rate and unemployment had a negative impact at that same level of significance. The variables highly explained variations on commercial banks liquidity as indicated by the coefficient of determination of 0.8083. The study recommended banks consider both the external settings and internal factors simultaneously in developing strategies for managing their liquidity position efficiently and the constant reviewing of such policies and directives by Bank of Ghana, as the macroeconomic factors continue and frequently varies in making sure they add to economic growth.