Corporate Governance and Efficiency of Rural and Community Banks (RCBs) in Ghana

Eric Oteng-Abayie, Anthony Affram and Henry Kofi Mensah
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Anthony Affram: School of Business, Kwame Nkrumah University of Science and Technology, Ghana
Henry Kofi Mensah: School of Business, Kwame Nkrumah University of Science and Technology, Ghana

Econometric Research in Finance, 2018, vol. 3, issue 2, 93-118

Abstract: Corporate governance crises that occur in the banking sector normally cripple economies and bring many hardships to individuals, corporate entities, communities, and the nation at large. In this study, we sought to examine the level of technical efficiency and productivity growth of rural and community banks (RCBs) and the impact of corporate governance indicators on the RCBs' efficiency performance in Ghana. A sample of 70 out of 140 RCBs was selected based on the ARB Apex Bank's performance ratings and data availability. Data envelopment analysis (DEA) was used to determine the technical efficiency scores of the selected RCBs. In the second stage of the analysis, these computed efficiency scores were regressed on the corporate governance variables to assess the effects of the latter. The findings from the DEA approach show that 11% to 20% of the sampled RCBs in Ghana operate close to the efficiency frontier, whereas the majority - about 65% to 81% - underperformed within the study period of 2007 to 2013. The study further established that the number of board members, frequency of board meetings, and corporate social responsibility have significant influence on RCB efficiency.

Keywords: data envelopment analysis; technical efficiency; corporate governance; rural banks; Ghana (search for similar items in EconPapers)
JEL-codes: C14 D24 G21 G23 G34 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Working Paper: Corporate Governance and Efficiency of Rural and Community Banks (RCBs) in Ghana (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:sgh:erfinj:v:3:y:2018:i:2:p:93-118

DOI: 10.33119/ERFIN.2018.3.2.2

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