The Role of Financial Intermediation in Alleviating Poverty in Ghana: The Case of GCB Bank Ltd

Abstract

Poverty is a major challenge that confronts most developing countries including Ghana. Economists believe that the problem of poverty can be tackled through various measures. The main objectives of the study are to explore the role and challenges of financial intermediation in wealth creation and poverty alleviation that face GCB Bank Ltd and also to find ways by which financial intermediation may be improved. The researchers adopted disproportionate stratified sampling. The sample size of 210 was made up of 14 zonal management executives/staff of GCB corporate/SME Banking Division and branches, 50 corporate/SME clients of GCB Bank Ltd, 146 retail clients of GCB Bank Ltd. Interviews and questionnaire were used as data collection instruments. The study revealed that efficiency in capital allocation, income generation, enhancement in private sector productive and Job creation are some of the roles through which financial intermediation alleviates poverty in Ghana. On the other hand, the management of GCB Bank Ltd enumerated various challenges such as high default rate, high bank minimum capitalization, High inter-bank interest rate, failure of interest rates to conform to low policy rates especially in the short – run and the absence of an effective credit reference bureau. Finally, the study proposed, that the best ways to improve financial intermediation are by expanding branch network; constant maintenance of systems, advancing more credit facilities to the informal sector; improving on the use of information technology; and pegging bank interest rate to the policy rate.

Keywords: Poverty, GCB Bank Ltd, Financial intermediation