Purpose - Actions of incumbent politicians and firms' managers during election years have been cited as sources of many problems that afflict economies and business entities. Given the controversies surrounding the impact of elections on firms' soundness, this paper poses a question of whether banks should be averse to elections. Specifically, this study aims to investigate the impact of elections on the profitability and efficiency of banks. Design/methodology/approach - Based on the authors' knowledge, this is maiden analysis in this context for Ghana where relatively advanced appropriate GMMtechnique has been used on annual data from 2012 to 2016. Findings - This study reveals that banks make higher returns in election years. Additionally, the authors report that government's economic policies in election years are detrimental to management efficiency, though insignificant. Practical implications - From an emerging economy perspective, this study would guide policymakers in designing policies that respond to, or minimize, the impact of elections on bank performance. The result of this analysis would also substantiate the market reaction to the changes in the economic, political and financial conditions. Originality/value - This analysis suggests that firms' performances in an election year depend on policies and political institutions in place. The authors argue that Ghana, with its exemplary democratic credentials and strong institutions, living alongside a high perception of corruption, is different. The contribution to literature is, first, by limiting this work to the banking sector of Ghana and, second, by incorporating the behaviors of incumbent governments and individuals in the regression specification model.
Purpose – Actions of incumbent politicians and firms'managers during election years have been cited as sources of many problems that afflict economies and business entities. Given the controversies surrounding the impact of elections on firms' soundness, this paper poses a question of whether banks should be averse to elections. Specifically, this study aims to investigate the impact of elections on the profitability and efficiency of banks. Design/methodology/approach – Based on the authors' knowledge, this is maiden analysis in this context for Ghana where relatively advanced appropriate GMM technique has been used on annual data from 2012 to 2016. Findings – This study reveals that banks make higher returns in election years. Additionally, the authors report that government's economic policies in election years are detrimental to management efficiency,though insignificant. Practical implications – From an emerging economy perspective, this study would guide policymakers in designing policies that respond to, or minimize, the impact of elections on bank performance. The result of this analysis would also substantiate the market reaction to the changes in the economic, political and financial conditions. Originality/value – This analysis suggests that firms'performances in an election year depend on policies and political institutions in place. The authors argue that Ghana, with its exemplary democratic credentials and strong institutions, living alongside a high perception of corruption, is different. The contribution to literature is,first, by limiting this work to the banking sector of Ghana and, second, by incorporating the behaviors of incumbent governments and individuals in the regression specification model. ; Objetivo - Las acciones de los políticos en ejercicio y los gerentes de empresas durante los años electorales se han citado como fuentes de muchos problemas que afligen a las economías y las entidades comerciales. Dadas las controversias que rodean el impacto de las elecciones en la solidez de las empresas, este documento plantea la cuestión de si los bancos deberían mostrarse reacios a las elecciones. Específicamente, este estudio tiene como objetivo investigar el impacto de las elecciones en la rentabilidad y eficiencia de los bancos. Diseño / metodología / enfoque - Según el conocimiento de los autores, este es un análisis inaugural en este contexto para Ghana, donde se ha utilizado una técnica de GMM relativamente avanzada y apropiada en datos anuales de 2012 a 2016. Recomendaciones - Este estudio revela que los bancos obtienen mayores retornos en años electorales. Además, los autores informan que las políticas económicas del gobierno en años electorales son perjudiciales para la eficiencia de la gestión, aunque insignificantes. Implicaciones prácticas - Desde la perspectiva de una economía emergente, este estudio guiaría a los responsables de la formulación de políticas en el diseño de políticas que respondan o minimicen el impacto de las elecciones en el desempeño de los bancos. El resultado de este análisis también corroboraría la reacción del mercado a los cambios en las condiciones económicas, políticas y financieras. Originalidad / valor - Este análisis sugiere que el desempeño de las empresas en un año electoral depende de las políticas y las instituciones políticas vigentes. Los autores argumentan que Ghana, con sus credenciales democráticas ejemplares e instituciones sólidas, que convive con una alta percepción de corrupción, es diferente. La contribución a la literatura consiste, en primer lugar, en limitar este trabajo al sector bancario de Ghana y, en segundo lugar, en incorporar los comportamientos de los gobiernos e individuos en ejercicio en el modelo de especificación de regresión.
