Is Traditional Banking Declining? An Empirical Analysis of Banks in Ghana

Abstract

Banks are traditionally into the business of mobilizing deposits and making loans. This generates interest income and has been a substantial proportion of bank’s total earnings. Studies have shown that income from the traditional banking business has declined substantially in recent times. This paper examines the state of traditional banking in Ghana by relating interest and noninterest income from the year 2003 -2012. We found that traditional banking remains strong in Ghana and interest income constitutes a higher proportion of total bank earnings. In recent times however, noninterest income has gained prominence as margin income deposits continue to squeeze.