DETERMINANTS OF SUSTAINABILITY OF RURAL BANKS IN GHANA: A CASE STUDY OF SELECTED RURAL BANKS IN ASHANTI REGION

ABSTRACT

Rural banks play enormous role in ensuring socio-economic development in Ghana. However, it is argued that rural banks have been facing some challenges that affect their sustainability. This study examined the sustainability of the Atwima Kwanwoma Rural Bank Limited, the Bosomtwe Rural Bank Limited and the Awabiagya Rural Bank Limited. The cross-sectional survey was used where questionnaires were designed to collect data. The selections of the respondents were done using the snow ball sampling procedures to locate the 150 customers of the three banks. The study revealed that the bank’s profitability performance is encouraging. This is because the ROA and ROE exceed the benchmark indicting that the banks are efficient in converting its investment into profit for the years. It also implies that the banks are capable of earning adequate money on its available assets. The multiple regression analysis showed that the amount of loans significantly affect the financial sustainability of the Rural Banks. It was indicated that customers were satisfied about the loan procedures, loan interest and loan maturity provide by the Atwima Kwanwoma Rural Bank, Bosomtwe Rural Bank and the Nwabiagya Rural Bank. The multiple regression analysis showed that a unit increase in loan interest would lead to 20.5 percent reduction in the number of years customer had being with the bank thereby affecting their financial sustainability.