a) Explain the term Bank Failure.

b) Explain three determinants of possible bank financial distress that could cause bank failure.

c) Discuss two economic implications of bank failure.

In Ghana, the problem of financial distress of banks is not new. In 2000, two banks (Bank for Housing and Construction and the Ghana Co-Operative Bank) were liquidated. On Monday 14 August 2017, there was a breaking news of the collapse of two banks (Capital Bank and UT Bank) with the third (UniBank) receiving special attention from the Central Bank with the appointment of KPMG as Official Administrators following UniBank’s insolvency. In almost a year later, the Central Bank revoked the license of five insolvent banks ( Unibank, Royal bank, Sovereign bank, Beige bank and Construction bank) to form a new Consolidated bank owned by government. The number of banksfailure is a concern to all stakeholders in the Ghanaian banking Industry.

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aBank failure is defined as the closing of an insolvent bank by the state regulator or federalThe comptroller of the money has the power to close nati... View the full answer