The determinants of rural and community banks (rcbs) performance: evidence from Ghana

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The study examines the determinants of rural and community banks performance in Ghana. The study uses annual panel data of 15 RCBs covering the period of 2010-2018. The study uses panel regression method to estimate the models. The study finds asset management, operational efficiency, interest rate, bank size as factors that determine the internal performance of RCBs. Inflation and GDP have inverse relationship with RCBs internal performance. The study further finds Assets Management, Bank Size and Interest rate as determinants of RCBs market-based performance, and Assets Management, interest rate and GDP as determinants of RCBs economic-based performance. The study concludes that the factors that drive RCBs performance in Ghana are Assets Management, Operational Efficiency, Interest rate, Bank Size and GDP. Based on these findings, the study recommends that RCBs strengthen their assets management. For example, high managerial skills to invest into an income earning assets like assets with characteristics of marketability on stock market would improve performance. RCB must efficiently operate in such that the cost associated with the maintenance and administration on a day-to-day basis compares well to the income accrued. The study further recommends the management of RCBs to improve their credit quality to increase interest income and reduce provisioning costs.
A thesis submitted to the department of accounting and finance, Kwame Nkrumah university of science and technology in partial fulfilment of the requirements for the award degree of master of business administration in finance