Question

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 units and 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

Difficulties which are associated with the financial system are as follows-

A. Presence of systematic risk cannot be completely avoided in any scenario by any bank.

B. Third-party individuals are also involved with this banks because the bank mostly interact with third parties.

C.the bank is continuously subjected to change in the monetary policy so there is a a effect of change in monetary policy in the bank reserve ratio.

D. bankers also subjected to various kinds of political risk and other operational risk related to regulatory issues.

These risks which are associated with the working of the bank can be resolved by coordinator approach by the regulatory authority and they should not be acting as a regulator, instead they should be acting as a facilitator so that they could facilitate company with the better rules and regulations which are the accomodative in nature in achievement of the goals and objectives of various banks so that the overall profit of the banks should be maximized and the value of the banks should also be maximized and achievement of its long-term vision and goal is done.