Macroeconomic and Bank Specific Determinants of Non-performing Loans in Ghanaian Banking Sector

Banks play an important role in the creation of capital for economic growth a nation and their reliability is very critical financial system stability. Nevertheless, banks face risks such as credit risk, which seem to have impact on profitability. To determine ratio Non-Performing Loans (NPLs) total bank loans most common indicator used. are that do not produce interest principal amount minimum 90 days fundamentally reflects performance bank. A high indicates greater risk loss while small presents low NPLs systematically affects whole banking if care taken will disturb its future development. The study examined determinants industry Ghana using specific macroeconomic variables. was based monthly data covering period January 2007 December 2019 employed ARDL bounds test co-integration estimate evidence short run long relationship among results revealed that, bank’s lending rate, profitability, Cost Income Ratio, Capital Adequacy Ratio Net Interest Margin factors influencing non-performing loans. At level, inflation reduces Furthermore, previous year’s net margin depresses Current whereas adequacy promotes short-run. recommends firm policy reform pays attention appraisal mechanisms improve quality loan portfolios through tougher regulations guidelines support healthier investment. Thus, management should well cut rate make them less expensive borrower’s meet commitments, whiles regulators undertake policies can ensure efficiency operations. Policymakers must consider GDP carefully by implementing set geared towards improving investment finally