JEFMS Journal

ABSTRACT:

This study investigated the impact of financial intermediation on economic performance using data from sixteen (16) universal banks in Ghana. This investigation is carried out using five popular indicators of financial sector intermediation, which are deposit mobilisation, customer credit, operating cost, reserve requirement and interest rate spread. Gross Domestic Product Per Capital (GDPPC) was used as a measure of economic sector growth or performance. The causal research design was used in this analysis. The unit root was estimated using the Augmented Dickey Fuller (ADF) test. The relationship between the dependent and independent variables was also determined using basic statistics tests and multiple regression analysis. The results reveal that bank deposits have an insignificant positive effect on the economy. Bank credit, however, has a negative significant effect on economic growth. The results also suggest that operating cost has a negative effect on the economic growth but the result is not significant. However, bank reserves have a positive significant effect. Finally, the results suggest that interest rate spread has a positive effect on the economy, but the relationship is not significant.

KEYWORDS:

Financial Intermediation, Economic Growth, financial systems, Gross Domestic Product Per Capita (GDPPC), Universal banks

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