Ghana’s 2018 banking sector crisis: The role of corporate governance factors
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2020-05
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Abstract
Discussions and analysis’ after the 2018 banking crisis have placed the burden of
blame on both managers of the failed institutions and the Bank of Ghana. This study
intended to investigate issues with the manner of corporate governance employed by
leaders of the collapsed institutions and how these factors contributed to the banking
crisis.
A total of 186 newspapers between 2017 and 2019 were scanned for insight regarding
the direct actions of managers and shareholders that led to the collapse of their banks
during the 2018 Ghanaian banking crisis. 58 texts were identified, and a content
analysis was conducted. The actions were also analyzed and categorized using the
IFC’s corporate governance methodology. This study provides valuable insight
regarding the actions of bank managers and shareholders and how these actions
caused the collapse of their banks.
The actions of managers and shareholders leading to the crisis included: interrelated
lending, loan approval without the necessary process, granting of loans earning no
interest, lending to risky borrowers, breaching the single obligor limit, the use of
depositors’ funds as personal funds, shareholder excessive control of managers,
exaggerating investments, overstating loans and advances to customers, fabricating
investments, re-engineering capital, misuse of BoG liquidity support, use of bank
funds to pay off obligations in related companies, infrequent board meetings, non executive directors disregarding their duties and the approval of large compensation
packages.
Description
Undergraduate thesis submitted to the Department of Business Administration, Ashesi University, in partial fulfillment of Bachelor of Science degree in Business Administration, May 2020
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Undergraduate thesis
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Keywords
Bank of Ghana, banking sector, regulation, IFC corporate governance framework, bank managers, bank shareholders, non-performing loans