Determinants of loan delinquency among rural banks in the ashanti region
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Date
2023
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KNUST
Abstract
The main objective of the study is to determine loan delinquency among Rural Banks in the Ashanti region of Ghana. The design was quantitative, explanatory, and a desk study. The sample of the study was 10 rural banks based on data availability. The data for the study was secondary and was gathered from the annual reports of the banks. The data was analyzed using panel regression. On the board characteristics, the study found that board size and board independence did not have a significant effect of loan delinquency. However board gender diversity had a significant positive effect of loan delinquency. On macro-economic characteristics, the study found that GDP does not have a significant effect on loan delinquency. Policy rate had a negative effect whiles inflation had a positive effect on loan delinquency. Concerning firm characteristics, the study found that liquidity did not have a significant effect on loan delinquency. However bank size and capital adequacy had a significant negative effect on loan delinquency. It is recommended that rural banks should increase capital adequacy. Rural banks can increase their capital adequacy by retaining earnings, issuing new shares or debt, or reducing their risk-weighted assets. They can also implement more conservative lending practices and risk management policies to reduce the likelihood of loan losses.
Description
A thesis submitted to the department of accounting and finance, college of humanities and social sciences, in partial fulfillment of the requirements for the degree of master of science in accounting and finance