The Impact of the New Minimum Capital Requirements of Bank of Ghana on Banks

CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY The advent of The rising Minimum ceiling sine qua non of Bank of gold coast (BoG) and its implications on buzzwords is indeed a heavy(p) topic worth researching. Researchers, experts, and regulators all get observe the need and concord that  hood is required for banks to operate swimmingly because seat of government provides protection(Boyd and Tony nifty Idea 2008) . The critical inter go steady is how much, and what type of pileus a bank needs to hold so that it has adequate protection. In the simplest term, capital de nones the portion of a banks assets which does not have to be repaid and indeed is available as a buffer in fact the value of the bank drops as a result of losses. If banks incessantly made profits, there would be no need for capital. Unfortunately, much(prenominal) an ideal world does not exist, so capital is undeniable to act as a cushion when banks are impacted by large losses. In the event that the banks asset value is start out than its total liabilities, the bank becomes insolvent and equity holders are seeming to choose to negligence on the banks obligations (Investopedia: Capital requirement) . Naturally, regulators would hold the view that banks should hold more capital, so as to ensure that insolvency  assay and the consequent system disruptions are minimised. On the other hand, banks would wishing to hold the minimum level of capital that supplies adequate protection, since capital is an expensive form of funding, and it also dilutes earnings. In 2007, the Bank of Ghana took steps to increase the minimum capital requirement of banks to improve their solvency. Eventually the threshold was raised in 2009 to GHS60 million with natal banks expected to attain this by 2012, several(prenominal) of the local banks are attempt to meet the requirement. All the foreign-controlled banks in the country have complied with the new capit al base of GH¢60 million. In attempts to ea! se this transition, around domestic banks have certain a directive to...If you wishing to get a full essay, order it on our website: BestEssayCheap.com

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