Analysis of Financial Performance and Liquidity Trends of Banks in Ghana

Abstract

The purpose of this study was to analyse financial performance and liquidity trendsof some selected banks in Ghana. A review of literature on financial performance and liquidity concerns was done due to the current challenges confronting these banks. The study then examined 180 corporate annual reports of these banks in Ghana during the periods 2006-2015. The trend analysis revealed that the banks were liquid throughout the study period except that these banks were less liquid at certain periods, particularly, in 2013 and 2014 which recorded average liquidity of 1.54 and 1.41 respectively. The banks financial performance during the periods was quite intermittent. The year 2006 recorded the lowest performance for these banks, representing 6.74% and 0.83% for ROE and ROA respectively whilst 2014 was highest point, registering a return on equity of 24.23% and a return on assets of 4.57%. The study recommends that efficient and effective liquidity management should be adopted by bank managers to ensure that banks operate profitably and do not become insolvent. Since, it has been established empirically that high levels of liquidity will guarantee better financial performance.