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Effect of Exchange Rate Movements on Ghanaian Banks

Received: 29 April 2014     Accepted: 12 May 2014     Published: 30 May 2014
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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.

Published in Journal of Finance and Accounting (Volume 2, Issue 3)
DOI 10.11648/j.jfa.20140203.15
Page(s) 62-71
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2014. Published by Science Publishing Group

Keywords

Exchange Rate, Foreign Exchange Risk, Ghana Stock Exchange

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Cite This Article
  • APA Style

    Albert Amponsah Addae, Michael Nyarko-Baasi, Michael Lawer Tetteh. (2014). Effect of Exchange Rate Movements on Ghanaian Banks. Journal of Finance and Accounting, 2(3), 62-71. https://doi.org/10.11648/j.jfa.20140203.15

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    ACS Style

    Albert Amponsah Addae; Michael Nyarko-Baasi; Michael Lawer Tetteh. Effect of Exchange Rate Movements on Ghanaian Banks. J. Finance Account. 2014, 2(3), 62-71. doi: 10.11648/j.jfa.20140203.15

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    AMA Style

    Albert Amponsah Addae, Michael Nyarko-Baasi, Michael Lawer Tetteh. Effect of Exchange Rate Movements on Ghanaian Banks. J Finance Account. 2014;2(3):62-71. doi: 10.11648/j.jfa.20140203.15

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  • @article{10.11648/j.jfa.20140203.15,
      author = {Albert Amponsah Addae and Michael Nyarko-Baasi and Michael Lawer Tetteh},
      title = {Effect of Exchange Rate Movements on Ghanaian Banks},
      journal = {Journal of Finance and Accounting},
      volume = {2},
      number = {3},
      pages = {62-71},
      doi = {10.11648/j.jfa.20140203.15},
      url = {https://doi.org/10.11648/j.jfa.20140203.15},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20140203.15},
      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.},
     year = {2014}
    }
    

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  • TY  - JOUR
    T1  - Effect of Exchange Rate Movements on Ghanaian Banks
    AU  - Albert Amponsah Addae
    AU  - Michael Nyarko-Baasi
    AU  - Michael Lawer Tetteh
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    DO  - 10.11648/j.jfa.20140203.15
    T2  - Journal of Finance and Accounting
    JF  - Journal of Finance and Accounting
    JO  - Journal of Finance and Accounting
    SP  - 62
    EP  - 71
    PB  - Science Publishing Group
    SN  - 2330-7323
    UR  - https://doi.org/10.11648/j.jfa.20140203.15
    AB  - 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.
    VL  - 2
    IS  - 3
    ER  - 

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Author Information
  • Methodist University college Ghana, Department of Banking and Finance, Box DC 940 Dansoman- Accra

  • Methodist University college Ghana, Department of Banking and Finance, Box DC 940 Dansoman- Accra

  • School of Business, Zenith University College, Ghana

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