Audit Committee Effectiveness and Bank Stability in Ghana: the Moderating Role of Information Sharing

Abstract

ABSTRACT Commercial banks and other financial sectors worldwide have undergone dramatic downturns due to global financial crises, issues in non-performing loans, and governance practices volumes in the past ten (10) years, and it has caught the attention of policymakers. The purpose of the study was to examine the moderating role of credit information sharing on the relationship between audit committee effectiveness and bank stability. Data were collected from 14 out of 23 commercial banks in Ghana from 2010 to 2019 due to data unavailability. The study adopted an explanatory research design. Secondary data was collected from banks‘ annual reports with excel through Ghana stock exchange and companies‘ website. The findings indicate that credit information sharing complements the audit committee‘s effectiveness (audit committee expertise, audit committee independence, audit committee meeting frequency, and audit committee size) in promoting the stability of banks in Ghana. The findings revealed that audit committee independence played a more significant role in strengthening resilience within Ghana, followed by expertise, diligence and size, respectively when information sharing patronage played a moderating character. The findings further showed that audit committee expertise played a more significant part in improving stability within the Ghana banking sector, followed by diligence, size, and independence after the credit information sharing cost played a moderated role. The researcher recommended that mandatory policies such as the audit committee effectiveness can improve bank stability by encouraging the credit information sharing usage. However, the researcher had limited time and resources, making the researcher run into a database problem.