Following an excruciating resolution process, the Bank of Ghana, as part of a broad-based effort to avert another financial crisis (at least one comparable in scale), enacted a slew of directives that have undoubtedly transformed the regulatory landscape. One such instrument is the Corporate Governance Directive, 2018. After 4 years of implementation, questions about whether post-crises reform has been effective in mitigating the build-up of systemic risks seem to be welling up. Surfacing some of these questions and analysing the evidence, whether anecdotal or empirical, may aid in understanding the impact of the Bank of Ghana’s micro-prudential policy tools on market conduct and its broad implications for financial stability.

There are three underlying questions undergirding one central question. The three questions are:

1. Does the current limit on tenure of office for CEOs and the board of directors pose any risks to non-bank financial intermediaries?
2. Is the Fit-and-Proper directive helping or hindering boards in the NBFI sector from developing a pipeline of good candidates for board positions?
3. Given the disparities across the sector regarding ownership and control, business model, and governance architecture, is the ‘one-size-fits-all’ approach to minimum board size a reasonable policy?

Depending on the answers to the three questions above, the principal question will then be: should the Bank of Ghana rethink its micro-prudential regulatory framework for the Non-Bank Financial Institutions sector?

The full article was published in the Business and Financial Times (B&FT) weekly newspaper. A free copy will be sent to you via email or WhatsApp upon request.