Establishing the relationship between rural bank efficiency and regional economic performance for the years 2000-2009

• Main Authors: Dayao, Cornelia, Ocampo, Owen, Tan, Evette, Villanueva, Nanette
• Format: text
• Language: English
• Published: Animo Repository 2011
• Subjects: Banks and banking > Philippines; Economic development > Philippines; Rural development > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18377
• Institution: De La Salle University

Rising disparity in per capita incomes and economic activity between and among the regions has been a growing concern for economic development. Growth and development has been concentrated in the urban areas while the rural economy is lagging behind, unable to experience the impacts of a growth in national output. Inadequate access to financial services by the rural population is considered as one of the culprits for this rising inequality, which links the importance of the rural banks in the regional economic development. Better access to financial services of the rural dwellers positively impacts their economic welfare. If rural financial markets function properly, the overall result is an improvement in the allocation of resources and higher growth of the rural economy a more dynamic integration of urban and rural markets and lessened effects of marginalization and inequality. Grounded on the proposition that inefficiency resulting from the intermediation function of the rural banks contributes positively to regional economic performance, we establish the contributory impact of rural banking functions to economic performance. The results showed that the number of rural bank branches resulting to efficiency in pooling savings and efficiency in allocating deposits for productive loans contribute positively to the welfare of the population within the region.