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Causes of Takeovers in Ghaha a Case Study of UT and Capital Bank

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Causes of Takeovers in Ghaha a Case Study of UT and Capital Bank University of Ghana http://ugspace.ug.edu.gh UNIVERSITY OF GHANA CAUSES OF TAKEOVERS IN GHAHA: A CASE STUDY OF UT AND CAPITAL BANK BY ANKUMAH ANDRE PAYIN (10424998) A LONG ESSAY SUBMITTED TO THE DEPARTMENT OF FINANCE, UNIVERSITY OF GHANA, LEGON, IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF BUSINESS ADMINISTRATION (FINANCE OPTION) DEGREE MAY,2019 1 University of Ghana http://ugspace.ug.edu.gh DECLARATION I, the undersigned student do hereby declare that this Dissertation is the result of my own original research and that no part of it has been presented for another Degree in any University. All sources of borrowed materials have been duly acknowledged. ………………………………… ………………………………… ANKUMAH ANDRE PAYIN DATE (10424998) i University of Ghana http://ugspace.ug.edu.gh CERTIFICATION I declare that the research and the presentation of this Dissertation were in accordance with the guidelines on supervision of Dissertation arranged by the University. ……………………………………… ………………………………… DR. LORD MENSAH DATE (SUPERVISOR) ii University of Ghana http://ugspace.ug.edu.gh DEDICATION This Research Project is dedicated to the Almighty God and to my Parents Dr. Richard Ankumah and Mrs. Magaret Ankumah. I further dedicate this to my family and friends who have been of great help to us in the course of this journey. iii University of Ghana http://ugspace.ug.edu.gh ACKNOWLEDGEMENT My first appreciation goes to the Almighty God for his blessing and strength throughout our study. Again, many thanks to the University of Ghana for instituting this program for Knowledge acquisition, developing skills in research and acquainting us on what was needed in the program. My sincere gratitude also goes to my supervisor, Dr. Lord Mensah for his persistent help in all the steps of the project, from topic selection to writing the final report, and his enormous contribution to the success of the study. Besides, his gracefulness, good advice, constructive criticism, support, and flexibility are admirable. Secondly, I wish to express my sincere and special appreciation to Jonathan Agbamey, Abena Konama Donkor, Frank Otinkorang, Francis Kofi Gogovie and Nana Akua Benneh Owusu-Obeng for their support and encouragement in carrying out the project. Lastly my gratitude also goes to my colleagues and friends at the University of Ghana Business School who supported me with ideas and suggestions in the course of writing this thesis. iv University of Ghana http://ugspace.ug.edu.gh TABLE OF CONTENT DECLARATION ............................................................................................................................. i CERTIFICATION .......................................................................................................................... ii DEDICATION ............................................................................................................................... iii ACKNOWLEDGEMENT ............................................................................................................. iv TABLE OF CONTENT .................................................................................................................. v LIST OF FIGURES ....................................................................................................................... ix LIST OF TABLES .......................................................................................................................... x ABSTRACT ................................................................................................................................... xi CHAPTER ONE ............................................................................................................................. 1 INTRODUCTION .......................................................................................................................... 1 1.1 Overview ............................................................................................................................... 1 1.2 Background of The Study ..................................................................................................... 1 1.3 Statement of The Problem ..................................................................................................... 4 1.4 Research Objectives .............................................................................................................. 6 1.5 Research Questions ............................................................................................................... 6 1.6 Significance of the Study ...................................................................................................... 6 1.7 Chapter Disposition ............................................................................................................... 6 CHAPTER TWO ............................................................................................................................ 8 v University of Ghana http://ugspace.ug.edu.gh LITERATURE REVIEW ............................................................................................................... 8 2.1 Introduction ........................................................................................................................... 8 2.2 History of UT Bank ............................................................................................................... 9 2.3 History of Capital Bank....................................................................................................... 10 2.4 Importance of Bank Regulation .......................................................................................... 10 2.5 Bank Failure Literature ....................................................................................................... 11 2.6 Acquisition .......................................................................................................................... 12 2.7 Determinants of Bank Failures ............................................................................................ 13 2.7.1 Loan Management ........................................................................................................ 13 2.7.2 Corporate Governance Practices in the Banking Sector ............................................... 16 2.7.3 Macroeconomic Circumstances .................................................................................... 17 2.7.4 Lending to a high-risk borrower ................................................................................... 18 2.7.5 Liberalization/ Deregulation ......................................................................................... 18 2.7.6 Government Interference .............................................................................................. 18 2.7.7 Fraud and Corruption.................................................................................................... 19 2.7.8 Political Patronage ........................................................................................................ 19 2.7.8 Banking Strategies and Operations ............................................................................... 20 2.8 Conclusion ........................................................................................................................... 20 CHAPTER THREE ...................................................................................................................... 21 METHODOLOGY ....................................................................................................................... 21 vi University of Ghana http://ugspace.ug.edu.gh 3.1 Introduction ......................................................................................................................... 21 3.2 Research Design .................................................................................................................. 21 3.3 Research Approach ............................................................................................................. 21 3.4 Selection of Cases ............................................................................................................... 22 3.5 Sources of Data ................................................................................................................... 22 3.6 Data Analysis ...................................................................................................................... 22 3.7 Classification of Ratios ....................................................................................................... 23 3.7.1 Common Size Ratio ...................................................................................................... 23 3.7.2 Liquidity Ratio .............................................................................................................. 23 3.7.3 Profitability Ratio ......................................................................................................... 24 3.8 Asset Management Ratio ................................................................................................. 25 CHAPTER FOUR ......................................................................................................................... 27 DATA ANALYSIS AND DISCUSSIONS .................................................................................. 27 4.1 Introduction ........................................................................................................................
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