Exploring Small Ghanaian and U.S. Banks\u27 Efficiency During the 2007-2009 Financial Crisis

The adverse effect of small bank closures in the United States from 2007 to 2009 required $7 trillion from United States taxpayers to rescue the United States economy. This comparative case study explored the reasons that led to differences in efficiency in small banks in the United States and Ghana during the 2007 to 2009 period. This research was driven by the contingency theory, which states leaders perform well if they change their styles of leadership to suit the situation at hand. Semistructured interviews were employed to gather data from 20 senior and chief executives of small banks: 10 from the United States and 10 from Ghana. Data were formatted into matrices using the van Kaam method and then coded and organized into categories, which led to the identification of the 2 themes: (a) policies and practices and (b) reasons that contributed to the differences in efficiency between small banks in the United States and Ghana. The participants expressed concerns regarding the impact of increased regulations and bank reserves, and the resulting impact on the future of small banks. Findings from this study suggest that small banks that relaxed their mortgage qualification requirements during the 2007 to 2009 financial crisis had more losses compared to the small banks that did not. Additionally, findings from the United States and Ghana revealed small banks focusing on commercial loans had less losses compared to small banks investing in residential real estate. This study may contribute to social change by providing bank leaders with additional tools to prevent future bank failures and the confidence to make new commercial and residential mortgage loans, thereby creating jobs, lowering poverty, increasing income levels, and contributing to a more stable economy in which small banks operate