UNDERSTANDING THE IMPACT OF COVID-19 ON THE FINANCIAL PERFORMANCE OF BANKS IN GHANA

Abstract

The COVID-19 pandemic has brought unprecedented challenges to financial institutions and national economies worldwide, including banks in Ghana. This study aimed at examining the impact of the pandemic on the profitability of commercial banks in Ghana. The researchers analyzed data obtained from 10 commercial banks from 2019 to 2021, focusing on the effect of the pandemic on return on assets (ROA), return on equity (ROE), and non-performing loans (NPL). The study revealed that the pandemic had an adverse effect on the profitability of commercial banks in Ghana, with a significant reduction in ROA and ROE. The NPL ratio also increased significantly, indicating a decline in loan repayment by customers. The research highlights the vulnerability of the banking sector, especially in developing countries, to global shocks such as the COVID-19 pandemic, and underscores the need for regulators to strengthen policies that make banks more resilient to such situations. The results of this study can assist bank managers and policymakers in Ghana's financial sector to adopt appropriate strategies to mitigate the impact of future events that threaten banks' profitability.