The impact of non-performing loans on financial sustainability: Evidence from Commercial Banks in Ghana

The impact of non-performing loans on financial sustainability: Evidence from Commercial Banks in Ghana | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article The impact of non-performing loans on financial sustainability: Evidence from Commercial Banks in Ghana Akantoa Bennett, Emmanuel Opoku Marfo, Kwame Oduro Amoako This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8810051/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract The effect of Non-Performing Loans (NPLs) on the financial sustainability of Commercial Banks in the Ghanaian economy is the theme of this research, which seeks to fill a research gap, as previous research on this topic was largely conducted on the banking industry as a whole. Using structural equation modeling on the findings of a primary survey conducted among 226 senior professionals, this research finds that high levels of NPL have a negative effect on financial sustainability through their effect on profitability, capital adequacy, and overall resilience, and this effect is partly mediated by the effectiveness of risk management, which does not completely mitigate the effect. Macroeconomic volatility is found to have a moderating effect on the transmission of the negative effect of NPL, especially in turbulent economic conditions. Non-Performing Loans (NPL) Financial Sustainability Commercial Banks Ghana Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8810051","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":590164369,"identity":"cea93824-97b6-42ab-a0ee-1bcd871f0010","order_by":0,"name":"Akantoa Bennett","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA3klEQVRIiWNgGAWjYDACHgiVwM/MfICBsYFYLQeAWiTb2RJI1GLQz2NAnBb+nsPPHn+osMszYOb5JvFzh40cA/vhoxvwaZE422ZucOBMcrE5M+82yd4zacYMPGlpN/Bac57BTOJgG3PizmbebRK8bYcTGyR4zPBqkT/P/g2opT5xw2GeZ5J/idFicLYHZMthkBY2aaJsMTxzpkzizJnjxZLNbMbWsm1pxmyE/CJ3Jn2bREVFdR4//+GHN9+22cjxsx8+ht/7SIBFAkSyEascBJg/kKJ6FIyCUTAKRg4AAH1zTIfZc2b4AAAAAElFTkSuQmCC","orcid":"","institution":"Catholic University College of Ghana","correspondingAuthor":true,"prefix":"","firstName":"Akantoa","middleName":"","lastName":"Bennett","suffix":""},{"id":590164370,"identity":"edbd1d1d-83d0-4df3-a57b-ff5b951dace9","order_by":1,"name":"Emmanuel Opoku Marfo","email":"","orcid":"","institution":"University of Energy and Natural Resources","correspondingAuthor":false,"prefix":"","firstName":"Emmanuel","middleName":"Opoku","lastName":"Marfo","suffix":""},{"id":590164371,"identity":"68d0b0d6-b4c8-4844-a8d7-1c99041f485a","order_by":2,"name":"Kwame Oduro Amoako","email":"","orcid":"","institution":"Sunyani Technical University","correspondingAuthor":false,"prefix":"","firstName":"Kwame","middleName":"Oduro","lastName":"Amoako","suffix":""}],"badges":[],"createdAt":"2026-02-06 18:23:33","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-8810051/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8810051/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":104301483,"identity":"c20be22a-6ec7-46ae-a5a8-fdba579f25b0","added_by":"auto","created_at":"2026-03-10 08:58:03","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":456827,"visible":true,"origin":"","legend":"","description":"","filename":"NPLSNE.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8810051/v1_covered_5205def7-13e1-49cb-8d10-2a0f64269bf3.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"The impact of non-performing loans on financial sustainability: Evidence from Commercial Banks in Ghana","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Non-Performing Loans (NPL), Financial Sustainability, Commercial Banks, Ghana","lastPublishedDoi":"10.21203/rs.3.rs-8810051/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8810051/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThe effect of Non-Performing Loans (NPLs) on the financial sustainability of Commercial Banks in the Ghanaian economy is the theme of this research, which seeks to fill a research gap, as previous research on this topic was largely conducted on the banking industry as a whole. 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