The effect of information and communications technology on financial performance of rural banks in Ghana

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The study investigates the impact of information and communication technology on the performance of rural banks in Ghana using annual financial data stream from 2011 to 2014. Panel Data Regression was used to model the impact of the predictive variables on the dependent variables. The study revealed that deposits as well as efficiency have significant influence on the return on assets of the rural banks. This suggest that in the presence of efficient usage of ICT facilities the rural banks are more likely to experience high deposit turnover hence their ability to transform these deposits into more loans. However, evidence from the analysis suggest weak association between ICT investments and return on assets implying that continuous investment in ICT from competition with other rural banks will put a drain on the returns that the rural banks are to earn on their assets. The findings also reveal significant linkage between efficiency and the dependent variables; return on capital employed and gross profits of the rural banks suggesting that efficient usage of the ICT is relevant to the performance of the rural banking industry than reinvestment into different ICT components. However, on deposits, the findings suggest negative association with return on capital employed but positive association with gross profit of the rural banks. The study finds evidence for the relationship between ICT cost efficiency and the total deposits of the rural banks suggesting that efficient utilisation of their current ICT facilities will increase the extent to which customers deposit cash with the rural banks than continually investing in new information and communication technology facilities.
‎ ‎A thesis submitted to the Department of Marketing ‎and Corporate Strategy of Kwame Nkrumah ‎University of Science ‎and Technology in ‎a partial fulfillment of the ‎award of the degree of Masters of ‎Business ‎Administration (Strategic Management ‎and Consulting).