Regional efficiency disparities in rural and community banks in Ghana: A data envelopment analysis

This study measured the level of rural and community banks' (RCBs) efficiency in Ghana to ascertain whether there were regional disparities in the levels of efficiency using Charnes-Cooper-Rhodes (CCR) and Barker-Charnes-Cooper (BCC) models. We collected data from 127 banks over a 4-year period from 2014 to 2017 (86.11% RCBs). For the data analysis, we employed ANOVA to compare efficiency scores for disparities based on the banks' Data Envelopment Analysis (DEA). Consistent with DEA predictions, we found technical and scales inefficiency disparities across the regions. For rural growth enhancing finance, tailored policies for asset selection should be enacted to protect the banks from risks associated with selecting too many bad assets. Also, the employment of cutting-edge technologies and intra-regional information sharing would protect the banks against regional-specific risks, and thus enhance efficiency.