The Determinants of Rural Bank Profitability

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Date
2012-02-08
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Abstract
The aim of this study sought to examine the determinants of RCB’s financial profitability. The assessment was on internal factors and external factors. The study used mainly secondary data extracted from the annual financial statement of the selected banks. The study used a panel data with two hundred observations, where it looked at the period 2006 – 2010 for fifty rural banks in Ghana. The empirical results reveal some interesting evidence on the determinants of RCB’s profitability. The findings suggest that the size of the RCB’s assets and increased non-interest income, are the internal factors that affect rural bank profitability, whiles GDP and the growth of money supply are external factors that affect rural bank profitability. However, loan loss provisions, total overhead expenses and inflation negatively affected rural bank performance. It is recommended that it might be necessary for bank management to take all the required decisions as to the proportion of their assets they will want to hold to enhance the financial positions of the bank. Again government should ensure a stable economic growth that could translate into rural bank profitability
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A Thesis submitted to the Institute of Distance Learning, Kwame Nkrumah University of Science and Technology, Kumasi in partial fulfillment of the requirements for the degree of Commonwealth Executive Masters of Business Administration, July-2012
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