An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy
International Journal of Economics, Finance and Management Sciences
Volume 1, Issue 6, December 2013, Pages: 367-373
Received: Oct. 10, 2013;
Published: Nov. 20, 2013
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Ransford Quarmyne Churchill, Department of Accountancy, Accra Polytechnic, Ghana
The banking system is central to the economic management of every country. The impact of the global financial crisis and developments in some economies therefore call for a thorough assessment of the risk management framework of the Ghanaian banking sector. The main theme that runs through this study is the assessment of the risk profile of the Ghanaian banking industry and the potential effects of any mismanagement of the sector, on the economy. The study exposits on risk management in the banks as theoretical framework. Then, on the strength of analytical tools as trend analysis, benchmarks and charts, it analyzes available records between 2007 and 2012 to assess the sector in the areas of balance sheet items, credit, market and operational risks standards in the sector. It as well uses the level of implementation of the BCBS accords as a yardstick to infer the sector’s risk profile and evaluates the implications of non-adherence to the recommendation therein. It settles on the note that despite the good risk standards in the areas of capital adequacy, sound liquidity ratio and profitability of the industry, the high rate of Non-Performing Loan, the cedi instability, the inadequacy of the implementation of the Basel accords and operational deficiencies presents yet the weakness of the sector that vitiates the risk stature of the sector. On the balance of probability therefore, the sector generally does not have the best risk profile. There is therefore the need to keep a keen eye on the sector as any untoward developments in the sector could easily spillover to affect the national economy.
Ransford Quarmyne Churchill,
An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy, International Journal of Economics, Finance and Management Sciences.
Vol. 1, No. 6,
2013, pp. 367-373.
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