“Effects of the financial sector liberalization on savings mobilization and credit allocation by rural banks in Ghana”
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Date
2009
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Abstract
This research had sought to examine how rural banks’ mode of savings mobilization and credit allocation had been influenced by Ghana’s Financial Sector Liberalization Programme. This programme created conditions which enabled rural banks to increase their savings and lending through the introduction of new products, expanding the size of their operational areas and adopting much more flexible lending modes. However, the mode of lending by rural banks was linked to clients with a high probability to repay, and so favoured traders and salaried workers as against clients in other sector of the rural community.
From the study, it was realized that the introduction of FINSAP had resulted in the growth of both savings and credit allocation by rural banks in Ghana. Next, rural people even though have limited income tend to save in more than one area, for example rural banks, credit unions, “Susu” groups, non-financial savings, and among others. For rural people, the most essential reason for saving is the possibility of accessing credit in future. Savings behaviour was not dictated by the deposit rate while lending rate was a deterrent for educing credit demand.
Description
A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirements for the award of the Degree of Master of Business Administration