Financial markets expert and Dean of University of Ghana Business School (UGBS), Professor Joshua Yindenaba Abor has advised that more emphasis should be placed on sensitizing the public about the importance of banking and savings.
Speaking to Joy Business at the launch of his new book “Financial Markets and Institutions” in Accra yesterday, Prof Abor intimated that there’s a need to alleviate the fears of the public that investments are not beneficial or for the rich persons.
"Inclusive finance is very critical for financial market developments so when a greater percentage of the population operates outside the financial market it becomes difficult to mobilize sufficient capital for investment."
He continued " Insufficient funding increases cost of financing but when many people participate in the market you generate a pool of funds which come to borrowers at a minimal cost so inclusive finance should be seriously addressed."
Professor Joshua Abor added that "We can only do that through financial education and literacy to enable people understand the benefits of investing in the financial market. If not they will continue to participate in the informal financial market and hide money in their rooms instead of depositing with banks and other financial institutions.
"Another problem is the fear of risk, people think they may lose their resources if they invest and it is because they don’t understand. Issues of regulation have been dealt with in the book and this is one area we seriously need to look at," he added.
Professor Abor also advised financial institutions to ensure they acquire sufficient information in order to avoid the effects of information irregularity in their transactions.
"Banks or financial institutions need information in order to operate so we need to improve the information environment. We’ve encouraged the establishment of credit reference bureaus and we can do a lot more in that regard. There’s the need to strengthen our record keeping system and address the issue of national identification."
"Once these institutions can share information, we can begin to address the issue of information asymmetry. It’s not only about rejecting or giving loans to a bad borrower, you can reject a good applicant who could have been able to use the loan sufficiently but because you don’t have enough information about such applicant, you tend to reject their application so information is so critical and we seriously need to address that."
The book by Professor Abor, which is the First Edition of Financial Markets book discusses the issues of financial markets and institutions from a frontier market perspective.
According to Professor Abor, the book will enable students in finance and economics to better appreciate the workings of financial markets and institutions.
It specifically examines the nature of the financial system from the Ghanaian context to enable lecturers, students, practitioners, and policymakers appreciate the successes and challenges in the financial system that they work in. She added that the book will be useful for introducing financial markets and institutions to undergraduate students, and also for imparting more nuanced knowledge on the subject to graduate students.
Practitioners working in banks, insurance companies, investment banks and finance companies, regulatory institutions, pensions industry and other sectors of the financial system will find the book a suitable companion.
According to the book, Ghana’s financial market can be categorized into money and capital markets. Though the money market seems very active, the capital market still holds great prospects for Ghana’s economic growth.