Abstract:
According to the findings of this study, the profitability of Ghanaian rural
banks in Ghana is being investigated. The rural bank's return on assets (ROA)
and return on equity (ROE) are two of the most significant measures of
profitability (ROE). Analysis includes an extra set of independent factors,
including the size and quality of the bank's branch network, as well as the
bank's capital adequacy and liquidity. Five years of panel data from five rural
banks in Ghana's Upper East area are used to explore fixed and random effect
models for fixed effect models. The Ghanaian Central Bank provides the
statistics. Among the macroeconomic variables considered in this research are
GDP, inflation and interest rates, as well as the currency rate. The profitability
of the five banks studied (2014 to 2018) changes during this time, according to
the report. As measured by ROAs, Ghanaian rural banks' capital adequacy
ratio and operational efficiency have the greatest impact on their profitability,
according to the study's findings (ROA). There is no correlation between rural
bank profitability (ROA and ROE) as measured by macroeconomic factors
(interest rate, inflation rate, exchange rate, GDP growth rate) and rural bank
profitability (ROA and ROE). A growing economy, according to the findings
of the research, will lead to increased profits for banks, which will in turn
benefit the government.
