Ghana’s 2018 banking sector crisis: The role of corporate governance factors

Date
2020-05
Authors
Torku, King
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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
Keywords
Bank of Ghana, banking sector, regulation, IFC corporate governance framework, bank managers, bank shareholders, non-performing loans
Citation