SMEs’ Financing and Banks’ Profitability: A “Good Date” for Banks in Ghana?

SMEs’ Financing and Banks’ Profitability: A “Good Date” for Banks in Ghana?

Author: 
Boadi, Isaac
Place: 
Oxon
Publisher: 
Taylor & Francis Group
Date published: 
2017
Record type: 
Responsibility: 
DanaLeo Paul, jt. author
Mertens, Gerard, jt. author
Mensah, Lord, jt. author
Journal Title: 
Journal of African Business
Source: 
Journal of African Business, Vol 18, No. 2, April-June 2017, pp. 257-277
Abstract: 

Small and medium enterprises (SMEs) are the core of most economies and are a major source of economic growth. In recent times, banks have been actively involved in the financing of SMEs through the provision of loans to this sector. This paper investigates the impact of SMEs financing on banks’ profitability in Ghana. The study employed the fixed effect model as the main regression tool. The study result reveals that SMEs significantly contribute to banks’ profitability in Ghana. Interestingly, transaction cost in administering SME loans was insignificant in all the models. Higher inflation reduces the real value of the loan and erodes the interest returns on the total credit to the SMEs. Conversely, growth of GDP enhances the growth of the bank profit.

Language: 
Country focus: 

CITATION: Boadi, Isaac. SMEs’ Financing and Banks’ Profitability: A “Good Date” for Banks in Ghana? . Oxon : Taylor & Francis Group , 2017. Journal of African Business, Vol 18, No. 2, April-June 2017, pp. 257-277 - Available at: http://library.au.int/smes’-financing-and-banks’-profitability-“good-date”-banks-ghana