An Analysis of Corporate Governance and the Performance of Rural Banks in the Upper West Region, Ghana

Abstract

The study used the mixed research design in examining corporate governance and rural bank performance in Ghana's Upper West Region. Purposive and simple random sampling techniques were used in the study. A sample size of 48 participants, composed of Bank CEOs/Managers, Board Members, Human Resource Managers, Heads of Administration and Senior Staff of four Banks was used. Questionnaires and interview guides were used for data collection. Data was analyzed both quantitatively and qualitatively. The study found that ownership concentration, audit quality, and board independence are important factors in good corporate governance and are influenced by business size, leverage, and board size, with a P-value of 0.073<0.1. It was also found that good corporate governance proxy by CEO duality, board independence, ownership concentration and audit quality have a substantial impact on rural bank performance. However, with a P-value>0.1, it was discovered that CEO duality has a detrimental impact on excellent corporate governance. Corporate governance challenges the banks face include clients’ default in repaying loans, inappropriate corporate governance practices, high operational costs of the banks and board members’ incompetence and perpetuation in office. The study concluded that corporate governance significantly affects the functioning of rural banks in the Upper West Region. The study recommended a reduction in the tenure of office of directors, putting in place appropriate rules and guidelines for the operations of the boards and ensuring effective checks and balances on the activities of the boards by way of ensuring effective corporate governance practices. Keywords: Corporate, Governance, Performance, Rural Banks, Upper West Region DOI: 10.7176/RHSS/12-16-01 Publication date: August 31 st 2022