Based on banking analysis, the six reasons banks fail in Ghana include Undercapitalization and Lack of good credit risk management.
Other reasons why the banks fail in Ghana include the following:
- Inadequacy of corporate governance
- Terrible loans management.
- Ineffective regulatory processes
- Fraudulent licenses operation.
The solutions to redeem the banking sector from these six cancerous roots are the following:
- The Central Bank of Ghana should make it a requirement for all banks in Ghana to have a certain amount of liquidity before embarking on operations.
- The bank's management should assess credit risks and the potentials of their customers before taking credit-related decisions.
- There should be standardized corporate practices in all banking practices.
- When it comes to loan management, banks should ensure they only offer loans to those that can afford them and make repayment accordingly.
- The Central Bank of Ghana should constantly regulate all the banks to check if their operations are by established corporate practices.
- All the banks should be monitored closely by the Central Bank of Ghana to check their authorization and, if found guilty, should be sanctioned with strong penalties.
Hence, in this case, it is concluded that many banking operations in Ghana need supervision from the Central Bank of Ghana.
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