Title: Credit, liquidity and market risks on financial performance: evidence from rural banks in Ghana

Authors: Musah Mohammed Saeed; Obeng Hollack

Addresses: Paari School of Business (PSB), SRM University-AP, Andhra Pradesh, India ' Faculty of Business Studies, Garden City University College, Ghana

Abstract: This paper examines the impact of credit, liquidity, and market risks on Ghana's rural banks' performance from 2016 to 2020, using a quantitative, descriptive, and correlational research approach with a sample of 15 banks. Findings indicate a non-significant negative relationship between rural banks' return on assets (ROA) and credit risk, yet a significant positive impact of ROA on market and liquidity risks. Moreover, return on investment (ROI) exhibits a significant positive correlation with credit and market risks but a non-significant negative association with liquidity risk. Net profit margin (NPM) shows a significant positive relationship with liquidity and market risks but a non-significant negative correlation with credit risk. The paper underscores the importance of managing bank liquidity to prevent potential crises that could lead to customer withdrawals and endanger stability. This study contributes to advancing risk management and performance knowledge in Sub-Saharan Africa.

Keywords: credit risk; market risk; liquidity risk; performance indicators; financial distress theory; Ghana; return on assets; ROA; return on investment; ROI; net profit margin; NPM.

DOI: 10.1504/IJAF.2023.138976

International Journal of Accounting and Finance, 2023 Vol.11 No.4, pp.285 - 304

Received: 10 Mar 2023
Accepted: 09 Dec 2023
Published online: 05 Jun 2024 *

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