Impact of recapitalisation and dividend pay-out policies on financial sustainability of rural and community banks in Ghana.
聽The study examines the effect of bank recapitalization and dividend policies on the financial sustainability of rural聽and community banks (RCBs) in Ghana. Data from 135 RCBs from 2011 to 2020 revealed an average financial sustainability聽index of 0.525 over the past decade, suggesting that RCBs can finance their operations and liabilities聽without diminishing shareholder value. Recapitalization and dividend payouts positively impact financial sustainability,聽with well-capitalized, highly pay-out RCBs showing faster improvements in sustainability compared to those聽with retention policy. This highlights the importance of RCBs bolstering their capital base, even when not mandated聽by regulators, to enhance financial sustainability. Furthermore, adopting a relaxed pay-out policy can signal operational聽efficiency and sustainability to shareholders.
