Abstract:
ABSTRACT
There are one hundred and forty-four Rural and community banks serving in
all the districts in Ghana with a large and diverse stakeholder community.
With the challenges that were brought about by the financial sector crisis
followed by the myriad of reforms in the financial sector, it has become
relevant to assess the readiness of all financial institutions for any further stir
in the system. This study focuses its attention on the rural and community
banking industry in Ghana. The study seeks to examine the corporate
governance factors that determine the financial accountability of rural and
community banks using regression analysis. Financial accountability was
measured using quality index, transparency and disclosure score and
compliance index. Corporate governance on the other hand took into
consideration three dimensions namely board characteristics, external audit
quality and Audit committees. These three dimensions have been recognised
in prior literature as the most used determinants of corporate governance. The
findings reveal that board independence, board structure, external audit fees,
audit committee existence and audit committee expertise have a significant
effect on financial accountability. The study therefore recommends that the
rural and community banks should strive for independence of their boards,
structure the leadership of the board in ways that allow for innovation and
continuity, establish audit committees among others. This will be the way to
go if rural and community banks should avert any crisis in the future and
ensure continues survival.
