Competition in the Banking Industry of Ghana

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Competition in the banking sector in Ghana seeks to look at the increased number of banks over the past six years, the paradigm that has occurred in bringing banking to a new level which should benefit the population and the economy. The study examined banking sector competition in Ghana as an objective. The increase in the number of banks in the Ghanaian banking industry and the liberalisation of the financial market has significant implications for the level of competition as well as the welfare of the customers in the banking sector. This is due to the fact that after the liberalization of the financial market for which banking forms part, only a few of the population can be said to be actively conducting business with the banks and the majority still unbanked. It is essential to tackle a problem like this by first looking at the level of competition and the gap it has created. The Herfindahl –Hirschman Index, along with the accompanying structural theories, were used to analyse changes in the level of concentration of the various banks and competition in the industry over the period of five years [2003 – 2008] which are having impact on the businesses and the economy as a whole as well as . It was found that the structural model of competition indicate a significant positive impact of financial liberalization on bank competition. Hence, there is a high level of competition in the banking sector of the Ghanaian economy which is skewed to benefit a minority of the population. It was generally recommended that Banks should come out innovative with products to attract a larger population of the unbanked into the market.
A Thesis submitted to the Institute of Distance Learning, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree of Commonwealth Executive Masters in Business Administration, June, 2011