5.1 Conclusion The strength and health of a banking system is a prerequisite for sustainable economic growth and development. Banks in Ghana have been undergoing major challenges in the dynamic operating environment over the past decade. Basically, to withstand negative shocks and maintain financial stability, it is important to identify the determinants that mostly influence the overall performance of banks in Ghana. The fundamental objective of this research was to identify the core determinants of profitability in the Ghanaian banking industry, despite the fact that global financial crisis continues to adversely affect banks performances, the world over. The scope of this study covered a random sampling, in which sixteen (16) banks were selected out of a total of 27, covering a period through 2004 to 2013. Based on series of tests conducted, the author made use of the random effect model to study both bank-specific/controlled variables( EQTA, LOTA, NIGI & LPTA) and external/un-controlled variables(MPR & INF), as this method revealed the more accurate compared to fixed effect result. The fact that performances in banks and other financial institutions are measured in various ways, the author used both ROA and ROE as dependent variables to ascertain the impact these selected variables would create on them. Result for ROA shows that both EQTA & MPR has a statistical highly significance effect on performances of these banks. This shows that banks with higher capital structure can absorb losses and are capable of withstanding any probable future shocks in Ghana. Therefore, the introduction of a new capital adequacy requirement by the Bank of Ghana was a smart move that could not only help banks to be sustainable, but also helping to contribute to stable economic growth. Also, the monetary policy rate (MPR) which determines the industry lending rate was also major contributing factor towards profitability in the Ghanaian banking industry. The higher this rate, the more profits banks were able to make, as they can easily factor it into their lending rate to the private sector, thus transferring the costs to customers. LPTA and INF were also highly significant to ROA, but affected it negatively. The more provision a bank makes the lower the profit it will realize at the end of the accounting period. This shows that asset quality was poor which accounted for huge accumulation of unpaid debt during the period that ended up soaring profits in these banks. Inflation also affected profitability negatively. It shows that inflation was never fully anticipated by banks managers and executives. These results are in line with our theory and expectations. However, both LOTA and NIGI were insignificant to banking performances in Ghana. Despite the fact that they had a positive correlation with ROA, both were statistically insignificant. For loans to asset variable, it might represent that because loan loss provision adversely affected ROA, most of those loans and advances were never repaid by customers. It is rational that the higher the loan portfolio, the higher the income obtained from it; however, it should also be noted that only quality loans will generate more income.
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