Comparative Analysis of Efficiency in Saving Mobilization, Credit Disbursement and Credit Retrieval of Rural Banks and Credit Unions in Ashanti Region: A Case Study of Sekyere Rural Bank Limited and St Peter’s Credit Union

As a way of linking the low-income Ghanaians to sources of finance for investment, rural banks and credit unions, among other financial institutions, have been established, and much emphasis has been placed on the promotion of the latter in the recent past as they appear to be more effective means of poverty reduction. The study therefore investigates the relative abilities of Rural Banks and Credit Unions in their activities to help provide financial capital to low-income earners. Specifically, the study seeks to find: the differences in the absolute amount of saving mobilized and credit disbursed over the study period (2000-2012) between the two financial institutions; differences in the rate of growth in saving mobilization and credit disbursement; differences in absolute amount of credit retrieved and the rate of credit retrieval; and causes of the differences in these activities between the rural bank and credit union. To achieve these, Sekyere Rural Bank and St Peters Cooperative Credit Union were used for the study. Data covered the period 2000-2012 and a sample size of 200 customers from the two institutions. Using logistic regression, percentages and charts, the major findings were that; the absolute amount of savings mobilised every year from 2000 to 2012 were higher for the rural banks than the credit unions. There was more number of savers in the rural bank than they were in the credit union. However, the growth in savings mobilization was significantly higher with the credit unions than the rural banks. Secondly, the rural bank gave more credit in absolute terms than the credit union but the rate of growth in credit disbursement was significantly higher with the credit unions than the rural banks. Thirdly, there was higher significant percentage credit retrieval with the credit unions than the rural bank. Finally, the study found that the purpose of the credit, the interest rate, time credit is received, and condition of payment significantly determine the retrieval (repayment) rate of credit and therefore need proper attention.