Motivations for Foreign Bank Entry in Ghana: A Country-level Analysis

The number of foreign banks operating in emerging market economies has increased significantly in recent years. Financial globalization and technological advancement have dramatically altered the global banking landscape, resulting in an increasing pattern of international banks’ involvement. Aside from the global forces driving bank penetration, this study seeks to assess how country-level factors motivate foreign bank entry in Ghana. In doing so, we employ quarterly data spanning 2000Q1-2017Q4. Applying the autoregressive distributed lag (ARDL) technique, the results establish that while corruption significantly drives foreign bank entry in both short- and long-run, the impact of political stability on foreign bank entry is significant only in the long-run. The findings also show that banking sector profitability and banking sector stability matter for foreign bank entry in both short- and long-term. The study presents some implications for policy based on the findings.