Eric Fosu Oteng-Abayie

Technical efficiency and total factor productivity of rural banks in Ghana

Abstract This study sought to estimate the level of technical efficiency and total factor productivity of RCBs in Ghana using Stochastic Frontier Analysis (SFA). The total factor productivity (TFP) was decomposed into efficiency change and technical change over the study period. Quarterly data spanning 2009 to 2012 was sourced from the ARB-Apex Bank for a sample of 107 out of 137 RCBs in Ghana. The findings suggested that RCBs have room to improve on their technical efficiency and total factor productivity levels. Technical efficiency change, on average, was the main source of total factor productivity change during the period. The results suggest the shifting of the RCBs production frontier causing improvement in the TFP. The finding implies that efforts to improve efficiency and productivity of RCBs must be focused on improving the operational environment through rigorous efficiency analysis and monitoring by the regulator and management boards. The findings on the relative efficiencies also have implications for investment decision by prospective investors.

Consumption of Electricity and Industrial Growth in the Case of Ghana

We examine the causative relationship amongst electricity consumption and industrial growth in Ghana for the period of 1971 to 2014. The results of the ARDL bounds test showed that long-run relationship exists among the variables. The error correction term was also significant and negatively signed providing further evidence of long-run relationship. Contrary to the widespread belief that electricity consumption spurs productivity, the study reveals that electricity consumption has a negative impact on manufacturing sector output in Ghana. This occurrence could be explained by the fact that whiles the average growth in electricity consumption in Ghana is positive, the share of industrial sector’s electricity consumption continues to decline on the average. The Toda-Yamamoto test shows a unidirectional causality running from electricity consumption to industrial growth in Ghana, supporting the growth hypothesis in the extant literature.

Time-frequency domain causality of prime building cost and macroeconomic indicators in Ghana: implications for project selection

Abstract According to the Ghana Statistical Service, construction activity generated US

Bounds testing approach: an examination of foreign direct investment, trade, and growth relationships

3.8 billion in 2014, representing about 12.7% of nominal GDP. A key factor that most investors in the construction sector consider in project selection is cost which has escalated over the years. Therefore, we examine the co-movements and causality in the time and frequency domains between the prime building cost index (PBCI) and its disaggregates on one hand and inflation and exchange rate on the other hand in Ghana. The findings revealed that the degree of co-movement between PBCI and inflation was significant at the 5% level and occurred over the long-run, indicating that construction cost drives inflation. The degree of co-movement between the prime build cost index and exchange rate occurred within the short term. These co-movements have policy implications for substituting inflation and exchange rates in project costing by investors in Ghana. The co-movement between the PBCI and inflation in the medium to higher frequencies suggests that inflation risk-averse investors should consider short-term projects. Again, the short to medium frequency co-movements between the PBCI and exchange rate indicates that investors should consider exchange rate risk in long-term projects.