Abstract:
ABSTRACT
Causes of financial crisis have been widely explored. Some of the studies looked
at credit risk, financial distress and corporate governance against financial crisis,
but as separate entities. Thus, this study sought to analyse the underlying causes
of financial crisis in Ghana. The sequential explanatory mixed methods design
was employed to ensure triangulation of findings. Using the criterion sampling
technique, 22 out of 23 commercial banks in Ghana made up the sample size for
the study. The quantitative data were extracted from the banks‟ annual reports for
the periods 2010 to 2019 whereas a semi-structured interview guide was used to
collect qualitative data from managers of all the 23 banks. The quantitative data
were analysed using the binary logistic regression estimated by the Maximum
Likelihood Estimation (MLE) where normal distribution was assumed, whilst the
thematic approach was used for the qualitative data analysis. Results revealed that
credit risk, financial distress and corporate governance all have statistically
significant effects on the odds of financial crisis occurring in Ghana. The
qualitative finding also revealed political and social instability, governance issues,
financial distress, credit problems, and supervision and regulatory issues to be the
causes of financial crisis in Ghana. It was recommended that Board of Directors
and Management of banks be put under constant surveillance to ensure that the
banks‟ resources are not used for personal gains. Finally, suggestions were made
for future studies
