Abstract:
This study examined the effect of governance on financial institutions in
Ghana. This is because studies done so far on this topic have failed to elicit the
unique features of the governance on financial institutions in Ghana into
consideration. The study was guided by endowment and new institution
theory. The study adopted Autoregressive Distributed Lag (ARDL) Bound
testing cointegration by Pesaran, Shin and Smith (2001) technique. The
findings of the study are as follows: there is no long run relationship between
governance and domestic credit to private sector in Ghana, there is no long run
relationship between governance and broad money in Ghana, there is short run
relationship between governance and domestic credit to private sector in
Ghana there is short run relationship between governance and broad money in
Ghana. Guided by the findings obtained from the study, the following
recommendations were put forward to the leader of Ghana should help
enhance governance so that it would translate into a better financial institution.
Governance policies should be directed into vibrant monitoring, capital
assistant and training for the financial institutions in Ghana, in order to have
sound financial institutions in Ghana.
