Determinants of bank lending behavior in Ghana.

This paper investigates the determinants of bank lending behaviour in Ghana. Using the GMM-System estimator developed by Arellano and Bover (1995) and Blundell and Bond (1998), we find that bank size and capital structure have a statistically significant and positive relationship with bank lending behaviour. We also find evidence of negative and significant impact of some macroeconomic indicators (central bank lending rate and exchange rate) on bank lending behavior. Again, competition in the industry was found to have a positive and significant impact on bank lending behaviour. Finally, relationship banking was found to have a positive correlation with bank lending behaviour in Ghana. Thus, policies aimed at maintaining stable macroeconomic fundamentals would greatly accelerate bank lending decision.