Original Research

Corporate reliance on bank loans: Evidence from listed companies in Ghana

J Abor
South African Journal of Economic and Management Sciences | Vol 8, No 4 | a1177 | DOI: https://doi.org/10.4102/sajems.v8i4.1177 | © 2014 J Abor | This work is licensed under CC Attribution 4.0
Submitted: 24 July 2014 | Published: 25 July 2014

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J Abor, University of Ghana Business School, Ghana

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Abstract

 This paper examines the incidence of bank financing among Ghanaian listed companies and the determinants of listed firms’ reliance on bank borrowing. The empirical results from a regression model reveal that bank loans account for one-third of debt financing. This suggests that bank loans are important in financing Ghanaian listed firms. The results also show that asset structure, growth opportunities and interest rates have significantly positive associations with bank debt ratio, while age of the firm, size of the firm, profitability and firm risk are significantly and negatively related to bank debt ratio. The results generally indicate that bank loans represent an important source of financing Ghanaian listed firms.

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