An Assessment of the Banking Regulatory and Market Framework in Ghana in the Wake of DKM Diamond Micro-finance Limited Financial Saga

Abstract

The DKM Diamond Micro-Finance Limited (DKM) financial saga caused rapid loss of unprecedented amounts of money. One effect of this development is the fact that farmers in most of the places of its operations have stopped farming whiles many customers are under pressure to find a secure way through life. This portends a rather disastrous consequence on the country's already-battered agricultural sector. Many blame it on the banking and financial regulatory framework of Ghana. They argued that a sound financial system is indispensable for a healthy and developing economy. The purpose of this paper is to analyze the strength, weaknesses, opportunities and threats inherent in the Banking and financial regulatory framework of the Ghana Banking Act. Primary data was sourced from fifty (50) bankers using a multi-stage and convenience sampling techniques. Data was analyzed with the use of tables and percentages. Even though the banking sector is currently doing well economically, but based on the data gathered, we found that supervision of the activities of the various Micro Finance Companies is not timely enough to avert some of these challenges as witnessed in the recent DKM crisis. Our literature also found that formulation of regulation and supervision of the sector is lagging behind most countries.  It is recommended that supervision of the activities of the various Micro Finance Companies should be strengthened whiles banks and other financial institutions in Ghana must formulate their domestic regulations in line with International regulations to encourage trading among other countries in the global community.

Key words: Financial Institutions, DKM Diamond Micro Finance Limited, Financial Crisis, Regulations