EVALUATION OF THE IMPACT OF CORPORATE SOCIAL RESPONSIBILTY ON THE PERFORMANCE OF RURAL AND COMMUNITY BANKS. A CASE OF ASHANTI REGION

Abstract

This study is about evaluation of the impact of corporate social responsibility on the performance of rural and community banks, a case of Ashanti region. Secondary data with reference period of 2012-2017 were collected from fifteen selected rural and community banks in the Ashanti Regions of Ghana Data Envelop Analysis was employed to evaluate the impact of corporate social responsibility on the performance and productivity of rural and community banks. The results of the DEA analysis revealed that the overall the average technical efficiency score is 94.7%. The sampled rural banks have a 5.3% level of inefficiency in input usage. They require input savings of 5.3%. DMUs with efficiency score of 1 are described as technically efficient. Rural banks with DMU 5, 7, 12, 14 performing better in technical efficiency. DMUs 1 and 2 can obtain input savings of 6%. and 6.1% respectively. The least inefficient banks are 4, 15 and 13: requiring input savings of 2.3%, 2.6% and 0.9% respectively. The most inefficient banks are 8, 9, and 11: require input savings of 17.5%, 14.1% and 18.1% respectively. Also the results also show that other bank specific factors like the age of the bank, non-performing loans and growth in liabilities had a detrimental effect on technical efficiency. Duality was also statistically related to technical efficiency. Most of the Board members of these RCBs were found to be the managing directors of the banks. This made it difficult for them to separate ownership from Management. The study therefore recommends that, Industry stakeholders (regulators) should improve the technical efficiency of these RCBs. RCBs should improve their technical efficiency by reducing wasteful operations so they can undertake decisions which will be in the interest of the bank RCBs should improve upon their efforts in generating non-interest income through commissions, net-earnings from issuance of investment instruments as they would make a significant contribution to the productivity of RCBs.