An Assessment of Loans and Advances, Business Advisory Services, and Their Effects on Rural Development Among Rural Banks in Wenchi Municipality

Ghana, like other Sub-Saharan African countries, has generally experienced low productivity, low-income levels, low local reserve funds, and unemployment. The entire rural population of Ghana is about 45.32 percent of the total population of Ghana. However, due to inadequate credit supply and lack of business consulting services, rural people face problems. Initially, sources of rural credit include institutional and non-institutional. The non-institutional credit is provided by money lenders, relatives, friends, traders, commission agents, and cooperatives, which attract very high-interest rates. This, therefore, brought about the idea of the rural bank in 1976 with the aim of channeling financial credit to rural dwellers for the promotion of local ventures and accelerated development in these areas in order to raise the standard of living of rural dwellers. This present study assessed the relationship between loans and advances and business advisory services of rural banks towards rural development in the Wenchi municipality. The descriptive research design was employed and questionnaires.was used for collecting data from respondents. The study used stratified random sampling and accidental/convenience sampling to select a sample size of 609, comprising of 9 staff and 600 customers of the banks. The study revealed that there was a strong but inverse relationship between loans and advances that were given to customers and the performance of the rural banks in rural development. The study also found out that there was a positive correlation between the status of business advisory services in rural banks and rural development. With respect to the challenges the rural banks face in granting loans and advances, it was revealed that high-interest rate, high default rate, and lack of collateral security were major challenges encountered by the banks in providing loans and advances to rural dwellers to improve on rural development. The study recommended that rural banks should place much emphasis on developing the facility of business advisory services to assist and support rural dwellers on how to manage their finances properly in order to translate into developing rural areas. Keywords: Loans and Advances, Business Advisory Services, Rural Development. DOI: 10.7176/RJFA/11-12-12 Publication date:June 30th 202