The effect of funding strategy on the lending patterns of banks in Ghana

2017-12-14 09:30:14 Viewed: 751 Downloads: 139
  • The effect of funding strategy on the lending patterns of banks in Ghana

      Angela Azumah Alu,Mohammed Amidu, K. A. Osei and Ransford Kuipo

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    Pub: 2017-12-14 09:30:14

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  • This article examines the effect of funding strategy on the lending patterns of banks in Ghana. We employ a panel dataset of banks from 2005 to 2011, to analyse the impact of funding sources on three sets of lending patterns employed by banks: Primary, secondary and tertiary economic sectors. The result shows that banks in Ghana use internally generated funds to finance loans to the primary and secondary sectors of the economy. In addition, our findings suggest that bank lending to the tertiary sector of the economy is significantly more sensitive to wholesale funding than to deposit and internally generated funds. The overall implication of this finding is that the bank funding structure needs to be considered in addition to the traditional bank-specific indicators when assessing banks’ ability to finance economic activities.

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  • Keywords

    Africa,developing country,funding sources,Ghana,lending patterns

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