Efficiency of Listed Banks Operations and Stock Price Movements

Authors

  • Joseph Kwadwo Tuffour University of Professional Studies, Accra
  • Kenneth Ofori-Boateng Ghana Institute of Management and Public Administration
  • Williams Ohemeng Ghana Institute of Management and Public Administration

Abstract

Banks' efficiency is linked to stock performance; literature from Ghana on the subject is that most banks are inefficient. What is not clear is whether this inefficiency translates into affecting stock price movements. Therefore, the study examines the effect of efficiency of listed banks operations on stock price movements in Ghana utilizing annual data from 2013-2017 for five banks. The banks' input and output variables were used to estimate the efficiency scores, within the Data Envelopment techniques. The results reveal that, the input and output variables accounted for about 80.5% of the banks' profitability and 92.5% of the banks' cost. The results indicated that, changes in profit efficiency have a significant positive impact on stock returns. However, a significant but negative effect of cost efficiency on stock returns was found. Thus, policy makers should encourage banks to operate efficiently in order to make effective capital allocation decisions.

Keywords: Banks Efficiency, Stock Price Movements, Data Envelopment Analysis

JEL Classifications:  C23, G14, G21, G32

DOI: https://doi.org/10.32479/ijefi.8392

 

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Author Biographies

Joseph Kwadwo Tuffour, University of Professional Studies, Accra

Research and Consultancy Centre Senior lecturer & Deputy Director 

Kenneth Ofori-Boateng, Ghana Institute of Management and Public Administration

GIMPA Business SchoolSenior Lecturer

Williams Ohemeng, Ghana Institute of Management and Public Administration

GIMPA Business School Senior Lecturer

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Published

2020-01-13

How to Cite

Tuffour, J. K., Ofori-Boateng, K., & Ohemeng, W. (2020). Efficiency of Listed Banks Operations and Stock Price Movements. International Journal of Economics and Financial Issues, 10(1), 219–227. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/8392

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