Analysis of the Impact of Basel Accord on Asset Quality of Banks in Ghana

Abstract

Universal banks are the main controller of the financial system in Ghana performing financial intermediation. They control greater portion of the investment funds from domestic deposits and are the main creditors of the corporate bodies, SMEs and individual investors. This makes commercial banks exposed to the risk inherent in lending. The study investigated on the analysis of the impact of Basel accords on asset quality in banks in Ghana. The purpose of this study is to ascertain how banks manage non-performing assets using Basel accord principle that have being implemented by bank of Ghana and to know the impact of the Basel accord on non-performing assets. The study adopted a descriptive survey design. Through the use of descriptive and inferential statistics, this design was considered the best strategy to accomplish the objective of the study. The study targeted a population of 27 commercial banks in Ghana, using a period of 2008 to 2015. The study used primary data and secondary data to achieve. The study concluded that most banks have a sound credit risk management system and the senior management banks develop policies and procedures for identifying, measuring, monitoring and controlling credit risk. Banks implemented credit policies using Basel accord principles. The research also concluded that banks have implemented the guiding principles to great extent.

Keywords: Basel Accord Principles, Non-Performing Assets, SME’s