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Research Article Open access CC BY 4.0

The Impact of Delinquent Loans on Financial Performance of Banks in Ghana

Bismark Addai, Chengyi Pu

Journal of Economics, Management and Trade · pp. 1–8 · Published 17 Jul 2015

10.9734/BJEMT/2015/19268

Abstract

Loan portfolio is the largest asset and the biggest source of income for banks; consequently, most banks advance huge portions of financial resources as loans to clients. Despite the stringent evaluation and monitoring strategies put in place by banks to ensure repayment of loans by borrowers, a considerable proportion of loans become delinquent. Empirical evidence on the incidence of non-payment of loans on financial performance of Banks in Ghana is very limited. Consequently, this study investigates into the impact of delinquent loans on financial performance (interest income and net profit) of banks in Ghana. Glaring in this study is a statistically significant impact of delinquent loans on interest income and net profit. At α = 0.05, delinquent loans significantly affect both interest income [F (1, 48) = 119.28, P < 0.05, partial

Delinquent loans interest income net profit financial performance banks Ghana

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