The Banking Sector Is The Backbone Of The Ghanaian Economy

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The banking sector is the backbone of the Ghanaian economy. Financial institutions play the role of financial intermediation by collecting and mobilizing resources to finance business and development projects that are essential for economic development ( Kutsienyo, 2011). For a healthy and developing economy, a sound financial system is a requisite. The banking sector constitutes a predominant component of the financial system of any economy (Sing, 2010).
During the 1970’s, the banking systems in Ghana were having weaknesses which include; high non-performing loans, major government control, weak banking law and regulations, fixed exchange rate, no interest on deposit, geographic restrictions and poor banking services. Aside that, (Aryeetey, 1996) showed that, the Ghanaian financial sector has witnessed many reforms and restructuring as a result of internal and external economic developments and shocks. The Ghanaian economy in the period 1976-83 experienced severe crises, in addition to poor economic growth and severe balance of payments problems. The Ghanaian financial sector was dominated by government control and ownership together with an acute and prolonged economic crisis, leading to financial distress. For instance, in order to support the numerous developments that sprang up after independence, specialized banks were established with specific mandates. The objectives of these banks were tailored to meet the financial needs of specific sectors of the economy.
In the

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