ABSTRACT
In 2022, Ghana is still recovering from a financial services sector crisis that has its origins from 2015. Between 2017 and mid-2019, the Central Bank, the Bank of Ghana (BoG), the regulator of banking business under Ghanaian law, revoked the licences of ten banks. In all, the regulator revoked the licences of over 400 weak, dormant or insolvent regulated financial institutions ranging from universal banks, savings and loans companies, microfinance and microcredit companies and finance houses. The 2017–2019 banking crisis is the result of regulatory enforcement failure despite a generally sound banking regulatory framework. Potentially criminal behaviour by bank insiders, poor corporate governance practices, inertia in taking regulatory action especially against politically exposed persons and other powerful interests and regulatory complicity by the Central Bank were the main reasons for the lack of implementation of the host of early intervention and rescue mechanisms available to avoid the mass insolvencies and the resulting costly bailout.
This chapter advocates for a shift in regulatory attitudes towards early intervention and rescue. To support the effectiveness of this shift in regulatory attitudes, we recommend swift prosecutions of past and future criminal behaviour in banks, a frequent reconsideration of regulatory directives, impartial enforcement of banking rules, full operationalisation and widening of the cover of the current deposit protection scheme, careful reconsideration of the activities of politically exposed persons in banking and less government control of rescue structures.
