An Empirical Analysis of Bank Profitability in Ghana: Evidence from Bank-Specific and Macroeconomic Factors

ABSTRACT: The purpose of this study is to analyze the bank-specific and macroeconomic determinant of profitability of seven commercial banks in Ghana for the period of seven years (2005 to 2011). This study uses the panel regression analysis to empirically examine these relationships. The findings show that both capital adequacy and the liquidity are positively related to bank profitability in Ghana banks. In addition, the study also indicates that the profitability in Ghana banking industry is negatively affected by the level of macroeconomic factors such as inflation and GDP. Finally, we conclude that the bank-specific and macroeconomic factors have significant effect on the bank profitability in Ghana. Keywords: Profitability, Bank, Return on Asset, Return on Equity, Ghana. ……………………………………………………………………………………………………………………………………………………………………………………………………………………