The relevance of Financial Statements and Its Impact on Organizational Performance: A case study of Atwima Mponua Rural Bank

Download Article


Authors : Eric Kwame Buah

Abstract:

This paper investigates the relevance of financial statements on Rural and Community Bank performance. Rural banks are the main source of financial service in rural sub- Saharan Africa and their services are mostly patronized by persons with little or no level of education. The study is therefore examining their level of knowledge on financial performance of the rural bank in which they are investing. The data was collected from a sample of one hundred and eighty respondents using questionnaires and face to face interviews conducted with management staff of the bank and used for analysis. The statistical tools employed in assessing the relevance of financial statements on the performance of Atwima Mponua Rural Bank were Mean distribution, coefficient of variation and regression analysis. The results indicate that the bank has been giving account statement quarterly or yearly to its customers. Findings of the study indicate that the bank post its annual financial statement to customers or post it on the bank’s notice board. Then, it is found that the bank organized annual general meetings to explain its financial statement to its customers. It is therefore concluded that there is no evidence to ascertain that knowledge on financial statement is relevant to organizational performance. It is recommended that this study will be extended to other rural banks in the country to help assess the findings of this study.

Keywords: Financial Statements, Performance, Atwima Mponua Rural Bank, Case study

References:

[1]. Aboagye, A. Q & J. Otieku, (2010).Are Ghanaian MFIs’ Performance Associated with Corporate Governance?, Corporate Governance, Vol 10, No.3, 307-320

[2]. Berger, A.N.& Humphrey, D.B. (1997).Efficiency of financial institutions: International survey and directions for future research, European Journal of Operational Research, Vol. 98, pp 175-212

[3]. Birley, S. &Niktari, N. (1995). The Failure of Owner-Managed Businesses: The Diagnosis of Accountants and Bankers, ICAEW

[4]. Bolton, J.E. (1971). Report of the Committee of Enquiry on small firms. Bolton Report Cmnd. 4811. London: HMSO.

[5]. Casu, B ,Molyneux, P & Girardone, C (2006). Introduction to Banking, Prentice Hall/ Financial Times, London

[6]. Collis, J. &Jarvis, R. (2002).Financial Information and the Management of Small Private Companies, Journal of Small Business and Enterprise Development, Vol. 9, No. 2, pp: 100 -110

[7]. Everingham, G.K., Kleynhans, J.E. &Posthumus, L.C. (2003).Introductory GAAP. 3rd Ed. Juta: Landsdowne.

[8]. Halkos, G. &Salamouris, D. (2004).Efficiency measurement of the Greek commercial banks with the use of financial ratios: a data envelope analysis approach, Management Accounting Research, Vol. 15, No. 2, pp 201- 224

[9]. Hatif, M.,& Al-Zubaidi, F. (2000). Individual investors’ level of understanding and using of accounting information in Baghdad’s financial market: An empirical study. Jarash Journal for Research and Studies, 4, 2.

[10]. Jooste, L. (2006).Cash Flow ratios as a yardstick for evaluating financial performance in African businesses, Managerial Finance, Vol. 32, No. 7, pp: 569 -576

[11]. Kirkpatrick, C ,Murinde, V &Tefula, M (2007).The measurement and determinants of x-inefficiency in commercial banks in Sub-Saharan Africa, European Journal of Finance Vol. 14, No. 7, pp 625-639

[12]. Kiyota, H (2009). Efficiency of Commercial Banks in Sub-Saharan Africa: A Comparative Analysis of Domestic and Foreign Banks. A paper prepared for the CSAE conference 2009 on “Economic Development in Africa” held at the University of Oxford

[13]. Lacewell, S. K. (2003). Do Efficient Institutions Score Well Using Ratio Analysis? An Examination Of Commercial Banks in The 1990s, Journal of Commercial Banking and Finance, Vol. 2, pp 17-33

[14]. Largay, J. A. III. & C. P. Stickney (1980).Cash Flows, Ratio Analysis and the W.T. Grant Company Bankruptcy, Financial Analysts Journal, Vol. 36, No. 4: 51-54.

[15]. Lee, T. A. (1982). Laker Airways - the Cash Flow Truth, Accountancy, Vol. 93, No. 1066, pp. 115-116.

[16]. Melse, E. (2013).What color is your balance sheet? The relevance and explanatory power of wealth accounts, Emerald Group Publishing Limited, Vol. 12, No. 4, 2004, pp: 17 -32

[17]. Naser K., Nuseibeh R., Al-Hussaini A. (2003).Users’ Perceptions of Various aspects of Kuwaiti Corporate Reporting, Managerial Auditing Journal, Vol. 18, No. 6/7, pg. 599 - 617

[18].Owen, E (2013) Finance & General Administration, Oak Hill Business Business, Partners.

[19].Owusu-Frimpong, N. (1999). Patronage behaviour of Ghanaian bank Customers, Journal of Bank and Marketing, Vol.17, No.7, pg. 335 – 341

[20].Samad, A. (2004).Bahrain Commercial Bank’s Performance during 1994-2001 Credit, Financial Management Review Vol. 10, No. 1, pp 33-40

[21].Seiford, L., M and Zhu, J (1999).Portability and Marketability of the Top 55 U S, Commercial Banks Management Science, Vol. 45, No. 9, pp 1270-1288

[22].Tarawneh, M (2006).A Comparison of Financial Performance in the Banking Sector: Some Evidence from Omani Commercial Banks”, International Research Journal of Finance and Economics, Vol. 3, pp 103-112

[23].The Ghanaian Times (2010). Rural Banks Supervision Weak – UN Survey, September 2, Back Page 34.

[24].The Ghanaian Times(2010).Citizen Rural Bank urges to reverse losses, September 23, pg. 21