An assessment of the performance of the rural banking industry of Ghana

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The importance of rural and community banks in the development of the rural economy of a country cannot be over emphasized. The rural financial system seeks to meet the financial needs of the micro, small and medium enterprises and also provide viable answers tot he rural poor, more especially rural small-scale operators. The ability of rural dwellers to access financial services from formal financial institutions impacts positively in their economic activities. It is in the light of the preceding paragraph that this study was undertaken to access the performance of the rural banking sector as Ghana seeks to attain middle income status by the year 2020. This financial subsector has an important role to play in the achievement of this goal The findings from the study show that in terms of deposit mobilization, the trend has been a general decline over the periods under consideration. From 2002, percentage change in total deposits increased at a decreasing rate. This may be attributed competition from other bigger and international banks that have hypothesis tested shows that in terms in terms of percentage change in total deposits, there is no statistical difference between the periods 1998-2002 and 2007-2007. It was also revealed that the mean percentage changes in total assets total loans did not differ significantly between the two periods considered. The study also reveals that over the period, the average growth rate of total assets and total deposits was 32.27% whiles that of total loans was 39.25%. This is an indication that the investment portfolio gradually lilted towards the granting of loans. The study also reveals that loan accounts increase faster than deposit accounts, indicating that the industry faces some challenges in the
A thesis submitted to the KNUST School of Business in partial fulfilment of the requirements of the degree of Masters of Business Administration, 2008