The Unintended Effects of Bank of Ghana’s Clean-Up Exercise on Unaffected Financial Institutions: Evidence from Yilo Krobo Municipality, Ghana

Main Article Content

Frederick Affum


This paper seeks to analyze the unintended accompanying effects of the Bank of Ghana’s financial sector sanitization popularly referred to as “clean-up exercise” which ended in August 2019 on the operations of unaffected financial institutions with ardent interest in customer deposits or investment and lending activities. The mixed-method approach thus, using both quantitative and qualitative methods of collecting data, was deployed for the study. The study population covered branch managers, credit officers, and cashiers of all financial institutions that were not affected by the Bank of Ghana clean-up exercise in the Yilo Krobo Municipality, Ghana. The findings of the study revealed that deposits have generally been low, whereas withdrawals have been very high, and these were due to fear and panic of losing funds or investments and loss of confidence among the banking population. On the other hand, lending activities have not been affected as customers of defunct financial institutions have shifted their loan demands or requests to the unaffected ones. However, some financial institutions are unable to meet loan request from their customers due to liquidity challenges arising from low cash deposits. The study recommends strict regulatory enforcement, periodic publishing of financial institutions in good standing, and timely education of customers of financial institutions in the event of any possible revocation of the license of  any Financial Institution.

Financial institution, financial intermediation, sanitization, clean-up exercise, Bank of Ghana.

Article Details

How to Cite
Affum, F. (2020). The Unintended Effects of Bank of Ghana’s Clean-Up Exercise on Unaffected Financial Institutions: Evidence from Yilo Krobo Municipality, Ghana. Asian Journal of Economics, Business and Accounting, 17(1), 1-12.
Original Research Article


Banks and Specialized Deposit-Taking Institutions Act (Act 930); 2016.

Bank of Ghana. Notice of Revocation of Licenses of Insolvent Savings and Loans Companies and Finance Houses, and Appointment of a Receiver; 2019.

Available: 11th January, 2020)

The Ghana Report; 2019.

Available: 11th January, 2020)

Business and Financial Times Online. BoG revokes licenses of 23 S&L companies; 2019.

Available: 14th January, 2020)

Banking Implications of the Bank of Ghana clean-up exercise on the Ghanaian economy; 2019.

Available: 21st January, 2020)

Citi business news. UGBS Faculty Speaks on Bank of Ghana’s Clean-Up Exercise; 2019.

Available:, (Accessed 5th February, 2020)

Roderick Okoampah Ayeh. Comprehensive Microfinance in Ghana; 2016. 19th February, 2020)

Schinasi, Garry, J. Safeguarding Financial Stability. Theory and Practice, International Monetary Fund Publication Services, Washington, D.C; 2006.

Charles Ackah and Johnson P. Asiamah. Financial regulation in Ghana: Balancing inclusive growth with financial stability; Overseas Development Institute. 2014;ISSN(online):1759-2917, ISSN (print):1759-2909.

The Reserve Bank of Australia. Submission to the Financial System Inquiry. ISBN978-0-9874673-7-9 (Online); 2004.

11.Myjoyonline. IMF warns of full-blown financial, economic crises in Ghana if; 2016.

Available: 19th February, 2020)

The Africa report. Ghana’s financial sector crisis is now part of the election campaign; 2019.

Available: 19th February, 2020)

Ghanaweb. “What you need to know about GCB’s acquisition of UT Bank/Capital Bank”; 2019.

Available:Ghanaweb. Retrieved 14 February 2019. (Accessed 11th January, 2020)

Wikipedia. Ghana banking crisis, Retrieved; 2020.


Enoch Darfah, Frimpong. “BoG collapses 5 banks into Consolidated Bank Ghana Ltd”; 2018. (Aaccessed 2nd March, 2020) Graphic Online. Retrieved 14 February 2019.

Magdalene Teiko, Larnyoh. “Here are the auditing firms for the 7 collapsed banks”. Pulse. Retrieved 14 February 2019. (Accessed 2nd March, 2020); 2018.

Alin Marius ANDRIEŞ, Alexandru Ioan Cuza. “Theories Regarding Financial Intermediation and Financial Intermediaries – A Survey”. 2009: The Annals of the “Ştefancel Mare” University of Suceava. Fascicle of the Faculty of Economics and Public Administration. 2009;9:2(10).

Essays, UK. The process in Financial intermediation in the banking sector; 2018.

Available: 5th May, 2020)

Scholtens, Bert; van Wensveen. The Theory of Financial Intermediation: An Essay on What It Does (Not) Explain. SUERF Studies, No. 2003/1, ISBN 978-3-902109-15-6, SUERF - The European Money and Finance Forum, Vienna; 2003.

Dewatripont M, Rochet JC, Tirole J. Balancing the Banks: Global lessons from the financial crisis. Princeton University Press; 2010.

Gurley JG, Shaw ES. Money in a Theory of Finance. Brookings Institution, Washington D.C; 1960.

Creswell JW, Plano Clark V. Designing and conducting mixed methods research. Thousand Oaks, CA: Sage; 2007.

Creswell JW. Research Design: Qualitative, Quantitative, and Mixed Methods Approaches (3rd Ed.) Los Angeles: Sage Publications, Inc; 2009.

Fraenkel JR, Wallen NE. How to design and evaluate research in education (6th edition). New York: Published by McGraw Hill, 1221 Avenue of the Americas; 2005.

Neuman WL. Basics of Social Research: qualitative and quantitative approaches. 2nd ed. Boston: Pearson. p146; 2007.

Ghana Statistical Services. District Analytical Report: Yilo Krobo Municipal; 2007.

Available: 5th 20th May, 2020)