The Impact of Contingent Factors on Performance Measures in the Rural Banks of Ashanti Region of Ghana

Abstract

The study examined the application of performance measurement techniques in the rural banks in the Ashanti Region of Ghana. Management accounting theory suggests that two different measures of branch performance should be computed; one to evaluate the economic performance of each branch and the other to evaluate the performance of branch managers (managerial performance).The purpose of the study was to ascertain the type of performance measures that are applied in these institutions. That is whether or not the management of these banks have been applying financial and/or non financial performance measures in assessing the performance of their branches and the managers of those branches. In addition the study examined the impact of contingent factors on the use of financial and non financial performance measures. Though, all the respondents stated that they used both financial and non financial performance measures, there was heavy reliance on financial measures. The study found that neither the balanced scorecard nor the Tableau de Bord have ever been used as performance measures. The study findings also revealed that profitability (i.e. Operating profit margin, Return on shareholders' capital) and liquidity (i.e. current ratio and working capital ratio) have varied impact on the use of performance measures by the rural banks in the Ashanti Region of Ghana.