Abstract:
ABSTRACT
The study discussed the concept of corporate failures in the context of firms
listed on the Ghana Stock Exchange. The commercial banks listed on the stock
exchange were sampled using the purposive sampling approach. Secondary
data in the banks' annual reports were gathered for the analyses. The data used
for the study span was from 2010 to 2019. The study's goal was to evaluate the
banks' performance and their level of distress. The Bankometer was used to
assess the distress level, while Return on Assets was used to assess the
performance. Descriptive analysis was conducted on the data to describe the
variables used in the study. Correlation analysis was used to determine the link
between the variables. The study revealed that the banks' return on assets
ranged from as low as -4 percent to 9 percent, with an average of 4 percent.
The correlation analysis revealed a statistically significant positive relationship
between capital adequacy and returns on assets. The banks are financially
sound as they recorded a minimum S-score of 98 percent. However, non performing loans and the cost to income ratio remained high and, in most
cases, were above the required maximum as recommended by IMF (2000), as
high as 49 percent for non-performing loans and 138 percent for the cost to
income ratio. Despite the sound performance of the banks, a conscious effort
should be made by the management of these banks to control the high rate of
non-performing loans and reduce the high operational costs
