Cash Flow Volatility in Ghanaian Banks (2004– 2024): A CV, Moving Average, and GARCH-Based Analysis

Abstract

In this paper, the researcher will examine the volatility of cash flow among commercial banks in Ghana in the years 2004-2024 using simulated monthly data. It represents both cyclical behaviour and systemic shocks by using both descriptive metrics (coefficient of variation and moving averages) and sophisticated econometric modelling (GARCH (1,1) including exogenous covariates). Findings indicate that net cash flows vary considerably, especially in the years 2008 global financial crisis, the 2014 macroeconomic turmoil, the 2017-2019 banking sector clean-up, and the COVID 19 pandemic. GARCH (1,1) findings are consistent with volatility clustering and regime changes, structural-break-dummy variables in the years 2008, 2015, 2017-2018 and 2020 exhibit a significant positive influence on the conditional variance equation, revealing that the risk is higher in those years. The results imply that banks of Ghana have increased the level of liquidity risks and that more advanced forecasting instruments, contingency liquidity planning, and proactive, based on volatility, macroprudential supervision are needed.