Assessing the Impact of the 2017–2020 Banking Crisis in Ghana: A Causal Analysis of Systemic Stability, Public Trust, and Economic Growth

The 2017–2020 banking crisis in Ghana had far-reaching consequences for the nation's financial industry, which has continued to grapple with its economic and social effects. This study moves beyond descriptive analysis to causally assess the crisis's impact on financial stability, public trust, and economic growth, proposing and testing a robust framework for building a more resilient banking sector. Employing a mixed-methods approach, the research combines quantitative data from 500 structured questionnaires with qualitative data from 20 purposive interviews with bank personnel, regulators, and economists. A Difference-in-Differences (DiD) model was used to isolate the causal impact of the crisis on financial stability, while Structural Equation Modeling (SEM) was employed to test the hypothesized causal pathways linking regulatory frameworks, corporate governance, and risk management to national economic outcomes. The DiD analysis reveals that the crisis caused a significant and direct decrease in Ghana's financial stability score by 12.7 points (p < 0.001) relative to a control country. SEM results confirmed the validity of the proposed recovery framework (CFI = 0.971, RMSEA = 0.048), demonstrating that poor corporate governance was a primary driver of the severe erosion in public trust (β = 0.48, p < 0.001), while weak risk management was a key determinant of financial instability (β = 0.41, p < 0.001). These failures were, in turn, shown to have a significant negative impact on economic growth. The findings underscore the profound and quantifiable costs of the crisis, pinpointing specific failures in governance and risk management as its core drivers. To foster a resilient financial sector, Ghana must prioritize an integrated strategy that simultaneously strengthens regulatory enforcement and enhances corporate accountability. This study offers actionable, causally-informed policy insights crucial for restoring confidence and ensuring long-term stability in Ghana's post-crisis banking reform. JEL Classification Codes: G01, G21, E44, O55, D83, E61