The six reasons why banks fail in Ghana include Poor corporate governance, Non-performing Loans, and Regulatory Lapses by the Central Bank of Ghana.
The other subsequent reasons for the failure of banks in Ghana include the following:
- Poor credit management practices;
- Questionable license process;
- Undercapitalization.
The solutions to redeem the banking sector from these six cancerous roots include the following:
- Poor corporate governance: Central Bank of Ghana should ensure all kinds of banks in Ghana adhere to the established corporate banking practices designed for them.
- Non-performing Loans: each bank that gives out loans should always ensure they give loans to those that can afford them and are ready to make judicious use of the money, such that they pay back the loan as when due.
- Regulatory Lapses by the Central Bank of Ghana: the Central Bank of Ghana should improve the regulatory activities of the banks in Ghana. They should demand periodic reports and audits from these banks.
- Poor credit management practices; the banks should analyze their credit risk practices before making decisions in terms of credit management.
- Questionable license process; the Central Bank of Ghana should conduct open and fair license operation that gives licenses to banks that are ready to practice according to established standards. They should also sanction banks that are not ready to go through the due process of getting licenses.
- Undercapitalization: Central Bank of Ghana should mandate every bank in Ghana to have a certain amount of capital before starting operation or certain liquid capital during operation.
Hence, in this case, it is concluded that banks failure in Ghana came as a result of many issues.
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