The Determinant of Bank Interest Rates Spreads in Ghana
International Journal of Economic Behavior and Organization
Volume 2, Issue 4, August 2014, Pages: 49-57
Received: Jul. 20, 2014; Accepted: Jul. 29, 2014; Published: Aug. 10, 2014
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Authors
Ransford Quarmyne Churchill, Department of Accountancy, School of Business and Management Studies, Accra Polytechnic
Collins Owusu Kwaning, Department of Liberal Studies, School of Business and Management Studies, Accra Polytechnic Ghana
Owusu Ababio, Department of Liberal Studies, School of Business and Management Studies, Accra Polytechnic Ghana
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Abstract
In Ghana, there is a widespread perception that interest rate spread is too wide. Banks, on the other hand, had justified the wide interest rate spread on the basis of some economic variables that affect the banks. The purpose of this paper is to examine the determinants of the bank interest margin in Ghana. This paper therefore examines the determinants of banking sector interest rate spreads in Ghana. Based on the availability of data, the paper focused on some banking industry-specific and macroeconomic determinants of (IR) spread. This study used exploratory and explanatory approaches. The exploratory methodology was used to identify the factors affecting determination of interest rate spreads and an explanatory approach was employed to establish how the factors affect the determination of interest spread in Ghana. The study found that factors affecting the determination of interest rate spread in Ghana are GDP, Exchange Rate, Prime Rate, Treasury Bill Rate, Liquidity, Overhead Costs, Loan Loss Provisioning and Profit Margin.
Keywords
Interest Rate Spread, Treasury Bills, Bank of Ghana, Exchange Rate, Prime Rate, Liquidity
To cite this article
Ransford Quarmyne Churchill, Collins Owusu Kwaning, Owusu Ababio, The Determinant of Bank Interest Rates Spreads in Ghana, International Journal of Economic Behavior and Organization. Vol. 2, No. 4, 2014, pp. 49-57. doi: 10.11648/j.ijebo.20140204.11
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