The Banking Sector in Ghana: Factors Responsible for the Dominance of Retail Banking.

Abstract

In an effort to encourage competition, growth and liberalise the Ghanaian banking industry for economic development, the Central bank of Ghana introduced the “Universal banking licence” to allow banks to operate in commercial, development, and investment or merchant segments without the need for separate licences. In spite of this, the banks in Ghana seem to be focusing largely on retail banking. The study therefore aims to investigate why the banks in Ghana are focusing mainly on retail banking to the detriment of other banking segments. Retail banking was defined and primary research was conducted on eight selected banks in Ghana to determine their motives for engaging in retail banking. The researchers principally used interview and questionnaires to obtain descriptive data for analysis and also made use of secondary data. The finding shows among other things that, huge capital requirement, high risk and advantages enjoy by state owned banks, couple with the absence of large corporate entities gives no option to privately owned banks but to focus on retail banking. This work is relevant for the least developing economies where competition in the banking industry is at its lowest due to governmental interference and where the banking industry is pivotal in their economic development.

Keywords: Banking Sector, Dominance, Retail Banking, Factors, Universal Banking.