Determinants of rural banks deposit mobilization in Ghana

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JULY, 2015
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The general objective of this study is to examine whether equity to asset ratio or capitalization, Liquidity ratio or Liquidity risk, Loan to asset ratio or credit risk, Return on asset or profitability and Log of assets or bank size are the factors that determine rural banks deposit mobilization in Ghana. The research included 112 rural banks in Ghana out of a total number of 137. These banks have been selected depending on the availability of their quarterly data from 2009Q1 to 2013Q4. Panel least regression with fixed effects has been used for analysis. The results of the findings suggest that, liquidity ratio, loan to asset ratio and bank size are significantly determinants of rural banks deposit mobilization. In view of the above findings, it is recommended that the Bank of Ghana, being the main supervisory body should as a matter of policy, strengthens its liquidity reserve requirements of the rural banks by making sure that they keep enough cash and near cash assets. Another implication of the findings is that, the credit management practices of the rural banks should become a matter of concern to all relevant authorities especially the Board of Directors of the various rural banks.
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 (Finance Option)