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Branch banking variability and rural banks' performance: a GMM approach

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  • Haruna Maama
  • Emmanuel Okofo-Dartey

Abstract

The study employed the resource-based view (RBV) theory to investigate the impact of the number of branches and city branches on the financial performance of rural banks in Ghana. The study used 492 annual reports of 76 rural banks in Ghana for the analysis. Return on capital employed (ROCE), return on equity (ROE) and net interest margin (NIM) were used as proxies for financial performance. A generalised method of moment was employed for the regression analysis. The evidence showed that the number of rural bank branches positively impacted their ROCE and ROE but negatively impacted their NIM. Consistent with the RBV theory, the study further found that the establishment of rural banks in cities positively impacted their performance. The number and location of rural bank branches can impact their financial performance. This study might be the first to empirically test the relationship between branch variability and the performance of banks.

Suggested Citation

  • Haruna Maama & Emmanuel Okofo-Dartey, 2023. "Branch banking variability and rural banks' performance: a GMM approach," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 13(5), pages 612-628.
    • Handle: RePEc:ids:afasfa:v:13:y:2023:i:5:p:612-628
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