Abstract:
This research aims to look at the impact of rural banks in the development of the Ghanaian rural economy.
According to the Moshi Conference, (1969), held in Tanzania, the purpose of rural development is to achieve “A rise in the standard of living and favorable changes in the way of life of the people concerned”.
Thus, the Rural and Community Banking (RCBs) system was promoted by the Bank of Ghana some 32 years ago when it opened a dialogue with the Ministry of Finance about what was called junior league of banking institutions to serve the special needs of the rural population in Ghana and to fill the financing gap which had been created in the rural community as a result of the failure on the part of the main commercial banks to penetrate the rural economy.
Description:
Basically rural banks are established to provide banking services to rural communities in which they operate. Rural banks channel its investments mainly in the agricultural sector of the economy and in small and medium scale enterprises. It also contributes in sectors such as Currently the Ghanaian population is estimated to be 24.5 million with 49% in the rural areas and 51% in the urban centers (2010 population census according to www.cia.gov/library/publications/the-world-factbook/geos/gh.html).The government of Ghana seeks to raise the living standards of the people in the rural areas and encourage the culture of savings and is therefore encouraging the establishment of more rural banks in the rural areas. In general terms, rural development is the actions and initiatives taken to improve the standards of living in an urban neighborhood, countryside and remote villages (source- U.S dept of agriculture). Rural development actions mostly aim at the social and economic development of these areas. Since rural development is very broad, this research will be narrowed to credit accessibility aspect and how rural banks perform in that direction.
