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Bank profitability: Insights from the rural banking industry in Ghana

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  • Michael Adusei
  • Caroline Elliott

Abstract

This paper analyzes the profitability of 112 rural banks (special unit banks created to promote rural financial intermediation in Ghana). The results generally show that bank size, funding risk, diversification, liquidity risk, and bank stability are significant predictors of rural bank profitability. Whereas an improvement in the funding risk of a rural bank in a particular period portends a drop in its profitability in the future, an improvement in the size, diversification, liquidity risk, and stability of a rural bank signifies an improvement in the future profitability of the bank.

Suggested Citation

  • Michael Adusei & Caroline Elliott, 2015. "Bank profitability: Insights from the rural banking industry in Ghana," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1078270-107, December.
    • Handle: RePEc:taf:oaefxx:v:3:y:2015:i:1:p:1078270
    DOI: 10.1080/23322039.2015.1078270
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    Cited by:

    1. Alnaa, Samuel Erasmus & Matey, Juabin, 2024. "Financial Deepening in Ghana; Does Macroeconomics Matter," MPRA Paper 120974, University Library of Munich, Germany, revised 02 Apr 2024.
    2. Van Duong Ha, 2019. "The Interactive and Causal Relationship between Productivity and Profitability of Vietnams Formal Microfinance Institutions," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(10), pages 1160-1170, October.
    3. Jenkins A. Asaah & Beatrice L. Asaah & Austin W. Luguterah, 2020. "Diagnosing the Organizational Culture of Rural Community Banks in Ghana and Its Effects on Their Financial Performance," Journal of Social Science Studies, Macrothink Institute, vol. 7(2), pages 86-114, December.
    4. Michael Adusei, 2022. "The liquidity risk–financial performance nexus: Evidence from hybrid financial institutions," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(1), pages 31-47, January.
    5. Kofi Twum Antwi & Beatrice Darko Obiri & Elizabeth Asantewaa Obeng & Simon Abugre, 2020. "Assessment of Environmental Sources of Financial Risks on Commercial Banks in Ghana," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(3), pages 86-98, July.
    6. Apostolos Dasilas & Goran Karanovic, 2023. "The Impact of Internet Finance on Bank Profitability. Evidence from The Chinese Commercial Banks," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 22(4), pages 591-608, December.
    7. Hussain A. Bekhet & Ahmad Mohammad Alsmadi & Mohamed Khudari, 2020. "Effects of Internal and External Factors on Profitability of Jordanian Commercial Banks: Panel Data Approach," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 359-375, October.
    8. Michael Adusei, 2015. "The impact of bank size and funding risk on bank stability," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1111489-111, December.

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