Impact Of Financial Reforms On The Banking System In Ghana

Abstract

The pre-reform policies, coupled with an acute and prolonged economic crisis which severely damaged the financial system in Ghana, caused policymakers to address the institutional deficiencies of the financial system through the Financial Sector Adjustment Program. This paper investigated the pre- and post-reforms policies to determine whether those policies have helped to eradicate problems that have hindered the effectiveness of the financial system. The liberalization of Ghanas financial system has included the relaxation of interest rate controls, credit ceiling, partial privatization of the governments own banks, restructuring of public sector banks, capital markets developments, and deregulation of the prudential system. The performance of the financial sector has been substantial and healthy since the reforms. Overall, the financial liberalization strategy pursued in Ghana has been supportive of wider economic development.