Effect of Exchange Rate Movements on Ghanaian Banks
Journal of Finance and Accounting
Volume 2, Issue 3, May 2014, Pages: 62-71
Received: Apr. 29, 2014; Accepted: May 12, 2014; Published: May 30, 2014
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Authors
Albert Amponsah Addae, Methodist University college Ghana, Department of Banking and Finance, Box DC 940 Dansoman- Accra
Michael Nyarko-Baasi, Methodist University college Ghana, Department of Banking and Finance, Box DC 940 Dansoman- Accra
Michael Lawer Tetteh, School of Business, Zenith University College, Ghana
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Abstract
The main purpose of this paper is to look at the exchange rate sensitivity of some listed banks on the Ghana Stock Exchange (GSE) between 2005 and 2010. In order to achieve the purpose, we adopted both quantitative and qualitative approaches. Econometric models were employed to deal with both the exchange rate sensitivities and to ascertain the exchange rate exposure of the Banks. The study discovered that all the banks studied engage in forex trading and made gains/profits from such activities. It was further found that apart from Ghana Commercial Bank and Standard Chartered Bank who were exposed to foreign exchange risk - pound sterling, the rest of the banks had no exposure to any of the currency risk. All the banks on the other hand have risk management structures in place to mitigate any risks that arise as a result of their operations. The overall interest in risk management by the banks is very high as they have put in some financial derivative measures to mitigate any exchange rate risk that they are exposed to.
Keywords
Exchange Rate, Foreign Exchange Risk, Ghana Stock Exchange
To cite this article
Albert Amponsah Addae, Michael Nyarko-Baasi, Michael Lawer Tetteh, Effect of Exchange Rate Movements on Ghanaian Banks, Journal of Finance and Accounting. Vol. 2, No. 3, 2014, pp. 62-71. doi: 10.11648/j.jfa.20140203.15
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