Assessing Rural Banks Effectiveness in Ghana

  •  Abdul-Baaki Y Kadri    
  •  Alhassan Bunyaminu    
  •  Shani Bashiru    


This study critically examines contemporary issues and lending activities to small scale farmers for agricultural production. The Agriculture sector is the mainstay of Ghana’s economy and small scale farmers play a dominant role in the sector which explains why this study concentrates on this sector. A survey research was conducted using both structured and unstructured questionnaires. A total of 127 farmers, 18 key informants and 10 rural banks were interviewed. Descriptive and inferential statistics were used to analyse the effectiveness of rural banks. Allocations of the various loans (agriculture, cottage industry, trade and transport and others ¾ social credit) in the rural banks’ credit portfolio were significantly different among the four loans categories (ANOVA p = 9.6E-29). From the tukey-kramer procedure, there was a difference in average amount of loan disbursed between agriculture and trade, and between agriculture and social credit with Q-Statistics of 3.84. The means for trade and social credit were larger than that of agriculture and by implication agriculture is treated less favourably in rural banks credit schemes and portfolio. These findings lend credence to the claim that rural banks are not sticking to their core mandate of prioritising credit provision to rural agriculture and have strayed into other endeavours.

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