Abstract:
The study aims to explore the factors that drive panic withdrawal, the reasons for withdrawals and
the further actions that bank clients take after withdrawing their deposits during the collapse of
banks from an individual customer perspective. A cross-sectional data set was collected from 80
customers of banks in Ghana using a survey instrument. In total, 44 percent of respondents have
accounts with at last one of the failed or collapsed banks.
Overall, half of the respondents withdrew their funds after the collapse of their banks while the
other half did not. Also 31.3 percent of the respondents withdraw their funds before their banks
collapsed. Customers withdraw their funds because they follow other depositors, and because of
their bank’s performance. Most of the respondents deposited with public banks after withdrawing
their funds followed by depositing with foreign banks. The result indicated that the majority of
those under the age of 39 years had accounts with the collapsed banks and majority of these people
are those with at least a degree qualification. Most of the customers did not withdraw their funds
from their banks and some were able to act earlier before the banks collapsed.
The result also suggests that withdrawals were made by depositors who are youthful (below the
age of 39 years) mostly because of their lack of trust for their bank, or the banks' performance.
Highly educated customers ended up keeping their funds away from the formal financial sector
after they made their withdrawals.
Keywords: Bank run; Ghana; customers; deposits; panic withdrawals; risk.
