DETERMINANTS OF BANK PROFITABILITY IN GHANA
In Ghana, as in most countries, regulation rather than competition has defined the structure and range of financial products and services a bank can offer, the types of assets and liabilities it can hold and issue as different kinds of banking institutions licensed to serve a diverse clientele base. There are currently thin lines of difference among them as the products and services rendered by the different bank types have converged over time and emerging non-bank financial institutions now compete with the banks in terms of the provision of similar kind of financial instruments and services (Mahamudu et al, 2005). Bank deposits, for example, compete now with other liabilities of financial intermediaries, such as mutual funds. This phenomenon seems to justify the commencement of universal banking in Ghana, whereby banks originally licensed as merchant or development banks can now be issued universal banking licenses with higher paid-up capital. This move was to eliminate the economic costs of maintaining regulatory barriers, which had risen although the barriers had become less effective. The universal banking concept is not only aimed at eliminating the differences due to similarity in bank products/services rendered but also restrictions on branch network of different bank types, as banks become “universal”. Currently, the banking industry comprises of twenty (20) major banks and one hundred and twenty (120) rural and community banks. The major banks comprise 8 commercial banks, 3 development banks, 2 merchant banks, 6 universal banks and one apex bank (Mahamudu et al, 2005).

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