Corporate governance in Ghanaian banks: exploring neo-patrimonial networks, bank governance dynamics, and challenges to banking stability

This study investigates the dynamics of bank governance within the neopatrimonial context of Ghana. Broadly, it analyses the interplay between formal institutional frameworks enshrined in the form of bank regulations and regulatory circulars or directives issued by the Bank of Ghana and entrenched informal social, political, and patron-client networks. Existing research on bank governance in emerging economies frequently highlights challenges posed by regulatory gaps and institutional weaknesses; however, this study takes a closer look at the role of neopatrimonialism. Specifically, then, it considers how personal connections, loyalty, and reciprocal obligations intersect with official organizational hierarchies in shaping both internal and external bank governance mechanisms and outcomes of Ghana’s banking sector. This qualitative case study gathered its primary data through in-depth semi-structured interviews with 49 participants (recruited via purposive selection, initially through direct invitations then via snowball sampling). Participants were bank executives, regulatory officials, and industry experts such as consultants with extensive banking sector experience and former senior bank executives. Secondary data derived from analysing key banking sector reports and regulatory documents from the Bank of Ghana and other significant stakeholders, including the World Bank and International Monetary Fund. By applying neopatrimonialism, this study examines how informal networks shape board oversight, regulation, compliance, and risk management in banking governance. The findings reveal that although Ghanaian banks are formally regulated and governed according to established standards and policies, informal social networks profoundly influence decision-making, resource allocation, and risk assessment. These informal dynamics present both advantages and challenges: while trust-based relationships may facilitate smooth operations and responsiveness, they can also lead to conflicts of interest, weakened oversight, and increased susceptibility to political influence, which risk negative effects on bank governance and even lead to the collapse of banks. This study makes an important contribution to the understanding of bank governance in emerging markets by illustrating how neopatrimonialism reshapes traditional governance expectations within Ghana’s banking sector. It also highlights the dual structure of bank governance, where formal mechanisms of bank regulations are continually shaped by informal networks and social norms, and underscores the need for bank governance reforms that address the unique complexities of neopatrimonial systems. The findings provide a foundation for developing governance strategies that are contextually adaptive and resilient, accommodating the convergence of formal and informal institutions in such neopatrimonial environments.