TY - JOUR
T1 - Empirical evidence on disclosure and risk-taking of banks in Ghana
AU - Kuranchie-Pong, Lydia
AU - Bokpin, Godfred Alufa
AU - Andoh, Charles
N1 - Publisher Copyright:
© 2016, © Emerald Group Publishing Limited.
PY - 2016/5/9
Y1 - 2016/5/9
N2 - Purpose: This paper aims to empirically examine the relationship between disclosure and risk-taking of banks in Ghana. The study also aims to gain an insight into the general risk-taking behaviour of banks in Ghana for the period 2007-2011. Design/methodology/approach: The study used panel regression model and relate risk-taking to disclosure, controlling for bank size, profitability, liquidity and treasury bill rate. Disclosure scores from a disclosure index are used as a measure of disclosure, likewise Z-score as a measure of total risk. Also, the ratio of provisions for loan losses to gross loans by each bank for each year was used to examine the general risk-taking behaviour of Ghanaian banks. Findings: The study revealed that the election year and the immediate subsequent year are characterized by an increase in non-performing loans. Greater disclosure is associated with more risk-taking and vice versa. This implies that market discipline is not effective in Ghana. Treasury bill rate, profitability and liquidity were found to be economically meaningful and statistically significant in influencing risk-taking of banks in Ghana. Originality/value: As there are relatively few studies conducted in this area, specifically among banks in Ghana, this study will broaden the scope of the literature on disclosure and risk-taking by providing empirical evidence.
AB - Purpose: This paper aims to empirically examine the relationship between disclosure and risk-taking of banks in Ghana. The study also aims to gain an insight into the general risk-taking behaviour of banks in Ghana for the period 2007-2011. Design/methodology/approach: The study used panel regression model and relate risk-taking to disclosure, controlling for bank size, profitability, liquidity and treasury bill rate. Disclosure scores from a disclosure index are used as a measure of disclosure, likewise Z-score as a measure of total risk. Also, the ratio of provisions for loan losses to gross loans by each bank for each year was used to examine the general risk-taking behaviour of Ghanaian banks. Findings: The study revealed that the election year and the immediate subsequent year are characterized by an increase in non-performing loans. Greater disclosure is associated with more risk-taking and vice versa. This implies that market discipline is not effective in Ghana. Treasury bill rate, profitability and liquidity were found to be economically meaningful and statistically significant in influencing risk-taking of banks in Ghana. Originality/value: As there are relatively few studies conducted in this area, specifically among banks in Ghana, this study will broaden the scope of the literature on disclosure and risk-taking by providing empirical evidence.
KW - Banks in Ghana
KW - Disclosure
KW - Liquidity
KW - Market discipline
KW - Risk-taking behaviour
KW - Z-score
UR - http://www.scopus.com/inward/record.url?scp=84982273882&partnerID=8YFLogxK
U2 - 10.1108/JFRC-05-2015-0025
DO - 10.1108/JFRC-05-2015-0025
M3 - Article
AN - SCOPUS:84982273882
SN - 1358-1988
VL - 24
SP - 197
EP - 212
JO - Journal of Financial Regulation and Compliance
JF - Journal of Financial Regulation and Compliance
IS - 2
ER -