Assessment of the Roles of Rural Banks to Promote Operational Performance of Small and Medium Enterprises in Ghana: A Case of Juaben Rural Bank Ltd.

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August, 2015
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Access to affordable and timely finance has been identified as a major challenge facing the Ghanaian Small and Medium Enterprises (SMEs). The primary objectives for establishing Rural Community Banks are to promote rural development through provision of banking and financial services; enhance rural productive activities, including Agriculture; and to improve economic status of Small and Medium Enterprises. However, it is not very clear as to whether the Rural Banks actually perform the primary functions for which they were established. This stems from the fact that there is an anecdotal evidence to support that a high proportion of Rural Bank‘s loan portfolio are channeled to salaried workers instead of the intended beneficiaries. The purpose of this study is to assess the roles of Rural Banks to promote the operational performance of SMEs. Data were gathered from 75 respondents through a questionnaire survey and interview. Data received from the respondents were entered into SPSS Data Application and Microsoft Excel to facilitate analysis. Descriptive statistics were employed in the presentation and analysis of the empirical results. The study ascertains the challenges facing the operational performance of these SMEs. The results of the study revealed the roles of Rural Banks. The results also indicate that rural banks are ready and willing to provide financial support to SMEs. However the provision of business advisory services and training for the SMEs are on the lower side. The results further suggested that interest rates charged by the rural banks are perceived to be relatively high. A number of specific action areas have been identified to facilitate public policy for Rural Banks and SMEs in Ghana. The study confirmed the anecdotal evidence that a higher proportion of rural banks‘ loan portfolio is directed to salaried workers leaving very little for farmers and SMEs, including cottage industry.
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 degree of Master of Business Administration (Accounting Option)