Question

1.​The recent collapse of some banks and financial institutions and the merger of others in ghana is proof that the financial system which consists of institutional unitsand markets that interact, typically in a complex manner, for the purpose of mobilizing funds for investment and providing facilities, including payment systems, for the financing of commercial activity remains unprotected in spite of the the presence of the Regulator and a solid legal system backing it. From the discussion in class and available literature, examine some of the difficulties associated with the financial system and how these challenges have been addressed by the Banks and Specialised Deposit Taking Institutions Act 2016 (Act 930). Are there any novel ways by which some of the challenges may be resolved in your opinion?

Answer 1

Answer 1

The quickest technique to answer this query is that the government including central banks will additionally have to maintain asset returns, in relevant stock prices. The de-leveraging method of the banking system will proceed to place a downward influence on asset prices. To prevent this, governments including central banks may be required to involve undeviatingly in stock markets. The quick-term explications to the query would be concerning Keynesian economics(economic theory). Firstly governments will have to maintain the aggregate market by improved spending in the face of diminishing tax incomes. Efforts at supporting or balancing government funds would not accomplish, as it would probably lead to Keynes’ savings inconsistency. Being private agencies try to raise savings then the decay in production also national income precludes them from making such. The government will boost finance including paradox would be determined. This helps banks to overcome by increased savings. The final choice is to re-capitalizing banks, governments will exchange private liability toward government debt. This further is unavoidable and acceptable. While agents suspect private debt they prefer to government debt regarded more reliable. Governments will have to accept this desire.

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