Bank reforms, competition, and stability in the Ghana banking industry
Date
2020
Authors
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Publisher
University of Delaware
Abstract
The central theme of my study is to assess the link between bank reforms, competition, and financial stability in the Ghana banking industry. Competition and stability are important for economic growth, but there may be trade-offs between competition and stability, so it is also important to determine which is more beneficial for growth. The research uses a panel data set of twenty-six banks in Ghana from 1998 to 2018. The Lerner index measures bank competition and the Z-score measures individual bank stability. I find that a rise in banks' market power promotes financial stability, and the recapitalization policies by the Central Bank of Ghana have not contributed to financial stability in Ghana. Moreover, over the last two decades, Ghana's banking industry has become moderately competitive. I assess the link between competition, bank stability, and economic growth of twenty Sub-Saharan African countries from 1996 to 2014. The empirical evidence shows that competition and stability positively affect economic growth in the long run, and competition is more beneficial for growth. However, banks' market power improves growth in the short-run. ☐ Keywords: Bank Reforms, Competition, Stability, Recapitalization, Economic Growth
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Keywords
Bank reforms, Economic growth, Recapitalization, Financial stability, Ghana, Banking industry