ABSTRACT
Formal banking took its roots in the colonial Gold Coast towards the end of the nineteenth century with the establishment of the British Bank of West Africa in 1897 (known as the Standard Chartered Bank (SCB) today) and Barclays (Dominion, Colonial and Overseas) in 1917. These two banks basically served the needs of the expatriate community to the exclusion of the local indigenous population. Prior to the establishment of the British Bank of West Africa, the Post Office Savings Bank was established in 1887 and was more widely used by the local population. By 1913, there were 13 branches of the Post Office Savings Bank, which grew to 32 branches by 1918. At independence, and with the establishment of the central bank, the importance of financial deepening to support the nation’s development agenda was vigorously pursued by the government through the central bank. In the process, many state banks were established with direct controls on interest rates and were allocated credit to reflect government priorities. However, the financial sector, as with the overall economy, was soon to run into trouble. Nevertheless, Ghana’s financial sector has seen a remarkable turnaround from the pre-1988 reform period. Two major financial sector reform programmes were implemented from 1988, one driven by the World Bank (the Financial Sector Adjustment Programme (FINSAP) between 1988 and 2000) and the other being home-grown (the Financial Sector Strategic Plan (FINSSIP) between 2001 and 2008). Both sets of reform impacted positively on the banking and financial system in many areas, but the 2001–8 reforms resulted in a major deepening of Ghana’s financial sector driven by the central bank.
