In recent times a lot of banks have found Ghana a good destination for extending their operations and this has heightened competition in the banking industry. By way of ensuring that banks maintain adequate working capital, the industry regulator i.e. Bank of Ghana
came out with a directive instructing all commercial banks to ensure that by the close of December 2012 their operating capitals do not fall below GH¢60million. As at the close of December 2011, almost all foreign banks had complied. However, some local banks are
sensing serious limitation in meeting the order. The study therefore had the objective of finding out the challenges facing these banks thereby recommending avenues for raising funds to meet the proposed capital requirement. Six banks operating in the Accra business
district namely National Investment Bank (NIB), Ecobank Ghana Ltd. (ECB), Prudential Bank, Ghana Commercial Bank, Merchant Bank Ghana and Zenith Bank were used for study.
Primary data was obtained by soliciting views from bank officials on questions like what challenges confront Ghanaian Banks in their cash mobilization efforts? How could the banks generate more funds from the Ghana Stock Exchange? What efforts were being made to
secure funding from strategic investors? How could they reduce operating cost to enhance working capital? The secondary data emanated from financial statements and brochures of
the banks. There was a direct approach to officers of these banks whose job description included liquidity adequacy or assets liability management. The questionnaire technique was
adopted as the ideal research instrument. The data was analyzed using SPSS application, TOPAZ and resulting charts and graphs was featured.
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Recommendations made call on the struggling banks to consider mergers and acquisition as a viable option to staying in business. It has also been suggested that The Central Bank could assist commercial banks in saving some funds to beef up their liquidity positions by financing compulsory service delivery systems such as ATMs, through long term loans. Some conclusions drawn are that some commercial banks genuinely need help to recapitalize and
that options being considered include attracting strategic international partners, mergers and acquisitions, as well as looking inwards to cut cost so as to step up liquidity levels.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Literature Review
- Methodology
- Data Analysis and Findings
- Recommendations
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This research work aims to analyze the challenges faced by commercial banks in Ghana when attempting to recapitalize to meet the Bank of Ghana’s new capital requirements. The study seeks to provide recommendations for raising funds to meet these requirements. Key themes explored in the text include:- Capital Adequacy and Regulatory Requirements
- Challenges in Cash Mobilization
- Funding Sources and Strategic Investments
- Cost Reduction Strategies
- Mergers and Acquisitions as a Re-capitalization Strategy
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This section introduces the context of the study, outlining the rationale for examining re-capitalization in Ghana's banking industry. It highlights the competitive landscape within the industry and the Bank of Ghana's directive regarding minimum capital requirements. The study's objectives and methodology are also presented in this chapter.
- Literature Review: This chapter provides an overview of existing research and theoretical frameworks related to bank re-capitalization, capital adequacy, and liquidity management. It explores relevant theories and models that inform the study's analysis.
- Methodology: This section details the research design, data collection methods, and data analysis techniques employed in the study. It outlines the target population, sample size, and the questionnaires used to gather primary data from bank officials.
- Data Analysis and Findings: This chapter presents the key findings derived from the analysis of both primary and secondary data. It discusses the challenges encountered by banks in their cash mobilization efforts, the limitations of the Ghana Stock Exchange as a funding source, and the challenges in accessing international funds. The findings reveal that banks face a number of obstacles in meeting the capital requirements, highlighting the need for innovative solutions.
- Recommendations: This chapter proposes practical recommendations for addressing the challenges identified in the study. It suggests strategies for raising funds, including exploring mergers and acquisitions, seeking strategic investors, and optimizing cost management. It also emphasizes the importance of central bank support in facilitating re-capitalization efforts.
Schlüsselwörter (Keywords)
This research work focuses on key concepts including bank re-capitalization, capital adequacy, liquidity management, cash mobilization, funding sources, strategic investments, cost reduction, mergers and acquisitions, and the role of the Bank of Ghana in supporting commercial banks. The study examines the challenges faced by Ghanaian commercial banks in meeting the capital requirements and explores viable solutions for overcoming these obstacles.- Quote paper
- AMABE Edmund Benjamin-Addy (Author), 2012, Prospects and Challenges of Re-capitalising Commercial Banks in Ghana, Munich, GRIN Verlag, https://www.grin.com/document/198123
