King Carl Tornam Duho | University of Ghana (original) (raw)

Papers by King Carl Tornam Duho

Journal of Economic and Administrative Sciences, 2020

The study examines the impact of risk on the profit efficiency and profitability of banks in Ghan... more The study examines the impact of risk on the profit efficiency and profitability of banks in Ghana. Data Envelopment Analysis was used to estimate profit efficiency scores and accounting ratios were used to measure profitability. The panel corrected standard error regression was used to assess the nexus using a dataset of 32 banks from 2000 to 2015. The paper found that the Ghanaian banking industry exhibits a variable return to scale property, suggesting that average costs change with output size. Profit efficiency score for banks closer to the efficiency frontier is 61 percent. Credit risk is significant in enhancing profit efficiency and return on equity. Market risk is relevant in improving profit efficiency, return on asset and asset turnover. To drive profitability, bank managers have to be committed to effective liquidity risk, insolvency risk and capital risk management. Operational risk reduces shareholders’ returns. The impact of size, age, stock exchange listing, cost efficiency and competition are all discussed extensively. The findings contribute to the knowledge on the risk-performance nexus and provide information that is valuable to academics, bankers and regulators for policy formulation. The findings are relevant to the newly established Financial Stability Council. This paper appears to be among the premier attempts to examine the effect of various risk types identified in the Basel III framework on bank performance in Africa.

International Journal of Managerial Finance, 2020

The purpose of this paper is to investigate the impact of diversification on profitability, profi... more The purpose of this paper is to investigate the impact of diversification on profitability, profit efficiency and financial stability of Ghanaian banks. The authors employed a panel regression technique on a data set of 32 banks from 2000 to 2015. The data envelopment analysis is used to compute profit efficiency scores with credit risk accounted for. The results suggest that income diversification decreases profit, profit efficiency and financial stability. The impact on profit and stability is U-shaped. The impact of asset diversification was found to be insignificant. High competition reduces both profitability and profit efficiency which is inconsistent with the quiet-life hypothesis of Hicks (1935), but financial stability increases with competition. High investment in tangible assets is associated with poor performance. Non-banking financial institutions that later became universal banks are not financially stable. Competition, size, age, government ownership and leverage which are controlled for and a sensitivity analysis conducted also provided relevant insights. The results are relevant in understanding the events in the Ghanaian banking industry in 2017–2018. Income diversification strategy is essential in determining the performance of banks. Management has to figure out the extent and scope of their diversification to benefit from the strategy. The authors examined diversification from the view-point of both the income statement and statement of financial position while most prior studies focused on only one aspect. The study is one of the few studies that employed the risk-adjusted profit efficiency measure in Sub-Saharan Africa.

Journal of Economic Studies, 2021

This paper investigates the impact of intellectual capital and its components on slack-based tech... more This paper investigates the impact of intellectual capital and its components on slack-based technical efficiency (SBM-TE) of banks. Data envelopment analysis is used to compute SBM-TE scores and the Value-Added Intellectual Coefficient (VAIC™) model is used to measure intellectual capital. An unbalanced panel of 32 banks that operated from 2000 to 2017 has been used. Overall, the efficiency scores are averaged at 79 percent, suggesting that an inefficient bank needs to enhance technical efficiency by 21 percent to be at par with the best performing banks. Beta-convergence and sigma-convergence exist among banks with faster speed evident among listed and local banks. Intellectual capital has a positive impact on SBM-TE and human capital is the main driver of technical efficiency among banks. This result is specifically evident among non-listed banks and foreign banks. Economies of scale property is also evident among the banks. Competition and asset tangibility inhibit technical efficiency among banks. Banks are advised to invest in value-adding emerging technologies and their employees so as to enhance their efficiency. The study offers insights for policymakers, practitioners and researchers in emerging markets. The study is premier in employing the SBM-TE to explain the intellectual capital and efficiency nexus, as well as, testing for both beta-convergence and sigma-convergence.

Afro-Asian J of Finance and Accounting, 2020

This study examines the determinants of intellectual capital performance (ICP) of banks in an eme... more This study examines the determinants of intellectual capital performance (ICP) of banks in an emerging market. The Value Added Intellectual Coefficient (VAIC™) model is used to measure ICP and Data Envelopment Analysis has been used to measure technical efficiency. We employ an unbalanced panel data of 32 banks over the period 2000-2017. The study found that income diversification, asset tangibility, human capital investment, cost efficiency, operational risk, leverage and bank stability are the main determinants of ICP. Diversification strategy interacts with other variables in informing ICP. Generally, to improve ICP, a focused strategy is favoured over a diversified strategy. However, to enhance value creation, some contextual peculiarities can be explored as guides to make strategic choices. The results and the implications are relevant for bank practitioners, financial analysts and management accountants in emerging economies. It is also relevant for the newly formed Financial Stability Council of Ghana, sector regulators, policymakers, educators and the research community.

International Journal of Banking Accounting and Finance, 2020

Various researchers have examined the relationship between intellectual capital (IC) and performa... more Various researchers have examined the relationship between intellectual capital (IC) and performance of banks. Yet, only few studies have examined the nexus between IC and bank efficiency especially in Africa. Using the VAIC™ model of Pulic (2000) [and its additive components human capital efficiency (HCE), structural capital efficiency (SCE) and capital employed efficiency (CEE)] to measure IC and Data Envelopment Analysis to estimate efficiency scores, the current study used Ghanaian data of 32 banks from 2000 to 2015 to examine the nexus. The study found that risk-adjusted efficiency scores are higher than non-risk adjusted scores. There is evidence suggesting that IC instigates efficiency in banks. This is borne largely from HCE suggesting the prevalence of the human capital theory. The results of the impact of SCE and CEE are insignificant except for the significant positive impact of CEE on profit efficiency. Stock exchange listing increases efficiency scores especially risk-adjusted efficiency. Other exogenous variables such as size, leverage and concentration were controlled for with the results discussed into detail. The results have implications for bank regulation, bank management and future research.

Asian Journal of Accounting Research, 2019

The purpose of this paper is to examine the impact of intellectual capital and its components on ... more The purpose of this paper is to examine the impact of intellectual capital and its components on bank diversification choice. Both asset and income diversification are computed and an unbalanced panel data set of 32 banks covering the period 2000-2015 have been used. The panel corrected standard error regression has been used to account for serial correlation and heteroscedasticity. The study found that intellectual capital determines the choice of diversifying. Precisely, intellectual capital motivates asset diversity but it dissuades income diversification. Human capital and structural capital are major components that determine asset diversity decisions. Income diversification decision, in this case to choose a focus strategy, is determined by human capital. This gives credence for the human capital theory in Ghana. Competition encourages a focus strategy. Bank size and leverage enhances income diversification while stock exchange listing and government ownership fosters the focus strategy. Diversification strategy, knowledge base of staff, corporate governance and internal control have been considered as factors leading to the collapse of some Ghanaian banks in 2017-2018. The study provides relevant insights for regulators, decision support units and corporate boards. Intellectual capital and value added metrics should be used for modelling and decision making as they have value relevance. This is a premier study that has examined the nexus between diversification strategy and intellectual capital in banks.

Journal of Research in Emerging Markets, 2020

The study explores the determinants of income diversification, as well as, test for the existence... more The study explores the determinants of income diversification, as well as, test for the existence of beta-convergence and sigma-convergence among Ghanaian banks. The study utilizes a dataset of 32 banks covering the periods 2000 to 2017. The panel corrected standard error ordinary least squares, fixed effects and system generalized methods of moments have been used. Both beta-convergence and sigma-convergence exist among Ghanaian banks; suggesting the presence of the catch-up effect and similarity of strategy over time. The risk profile and risk portfolio of banks affect their diversification strategy. Banks that are faced with high insolvency risk and liquidity risk tend to diversify while banks that are faced with low credit risk tend to diversify. Stable banks tend to adopt a diversification strategy even when they are exposed to credit risk. Network embeddedness drives diversification strategy. The implications of the study for practice, policy, and future research have been discussed.

Modern Economy, 2019

There is much evidence to support the notion that inspirational leadership is inextricably crucia... more There is much evidence to support the notion that inspirational leadership is inextricably crucial for the functioning of any organization, either in the private or public sector, which is bent on operating as a goal-oriented body within which various individuals work under the coordination of an ethically oriented leader. The paper unpacks African Ethics and how a loss of virtue in leadership in both the public and private sectors, has led to corruption with its hugely negative impacts on society. The paper highlights theoretical conceptions and potential practical actualizations of ethical practice. Recommendations and suggestions are made as to what can be done to mitigate un-ethical practices such as corruption with its corrosive effect on life in general.

Athens Journal of Business & Economics, 2019

This paper is an attempt to investigate the effect of intellectual capital (henceforth IC, which ... more This paper is an attempt to investigate the effect of intellectual capital (henceforth IC, which is defined using Value Added Intellectual Coefficient (VAIC™) as discussed in Pulic (2008, 2004, 2001, 1998) on financial performance and financial stability of 32 banks in Ghana from 2000 to 2015. The dataset is an unbalanced panel of 354 observations. The methodology of the paper is to test eight hypotheses related to IC and its components (Human Capital Efficiency or HCE, Structural Capital Efficiency or SCE and Capital Employed Efficiency or CEE) and their relationship with financial performance and financialstability. The paper finds support in favour of the claim that VAIC™ has a positive and significant impact on financial performance and financial stability. On the other hand, among the components of VAIC™, it is only HCE that behaves in a manner similar to VAIC™. Among the other components, SCE has a negative impact on financial performance and financial stability. CEE has a positive impact on financial performance but a negative impact on financial stability. This implies that SCE reduces both financial performance and financial stability, while CEE increases financial performance but reduces financial stability. Effects of controls, such as leverage, bank size, concentration and ownership structure are discussed in some detail.

Thesis Chapters by King Carl Tornam Duho

Long Essay, 2017

The study aims to ascertain the effect of risks on the profit efficiency of Ghanaian banks. Ratio... more The study aims to ascertain the effect of risks on the profit efficiency of Ghanaian banks. Ratio analysis is used to measure risk while the mean of ratios is used to test the returns to scale property of the industry. The non-parametric data envelopment analysis profit efficiency scores are estimated using the ratio of cost and revenue approach and using the bootstrapped truncated regression the nexus is ascertained. Data from 2000-2015 of 32 Ghanaian banks was used. The study found significant impacts on profit efficiency, negative and positive for liquidity risk and market risk respectively. Credit risk, insolvency risk, and operational risk have a negative and insignificant impact on profit efficiency and capital risk, positive and insignificant. In the absence of insolvency risk, capital risk has a negative impact and in the absence of regulation, operational risk has a positive impact all of which are insignificant. A pooled industry data exhibited a variance returns to scale property. There is comparatively high-profit efficiency at 68% calculated based on each year’s returns to scale over the study period which shows the closeness of the banks to the benchmark efficiency frontier. Regulation and diversification respectively have a negative and positive impact while intermediation, return on asset and concentration in the absence of size, has a positive and significant impact on profit efficiency. This paper is the first risk-efficiency study of its kind that investigates the nexus between various risk types with profit efficiency. It has also covered all key risk types specified in the Basel Accord (credit, liquidity, market and operational risk) and this will provide relevant knowledge to the government, regulatory supervisory bodies, policy makers, practitioners as well as academics. Theories have also been aligned to the study of risk profit efficiency nexus.