Volume 4, Issue 1, March 2019, Page: 34-43
Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana
Emmanuel Atta Anaman, Department of Banking and Finance, School of Business, University of Education, Winneba, Ghana
Mavis Pobbi, Department of Banking and Finance, School of Business, University of Education, Winneba, Ghana; Department of Accounting, School of Business, University of Education, Winneba, Ghana
Received: Apr. 7, 2019;       Accepted: May 23, 2019;       Published: Jun. 12, 2019
DOI: 10.11648/j.ijafrm.20190401.14      View  137      Downloads  48
Abstract
Microfinance has become crucial to Ghana's financial system over the last three decades. They target the financially excluded and poverty stricken population with micro financial products, empowering the poor to create livelihoods for themselves and by so doing contributing towards the economic growth of the country. In recent years, there have been reported cases of the collapse of several microfinance institutions and others facing serious challenges. These series of events signal an ominous situation for the microfinance subsector and the entire financial system for that matter. This study therefore aims at examining the performance of microfinance institutions in Ghana, focusing on three key performance indicators; profitability, liquidity and credit advanced. The study revealed that loan default and interest expenses are the major variables which negatively affect the performance of the MFIs. In ensuring the sustenance of the microfinance subsector of the financial system, the study recommends that, the MFIs should adopt lending methodologies which minimize loan defaults and the Bank of Ghana should be encouraged to strength its regulatory oversight and power to rein in MFIs which offer outrageous rates of return on customers' deposits.
Keywords
Microfinance Institutions, Profitability, Liquidity, Credit
To cite this article
Emmanuel Atta Anaman, Mavis Pobbi, Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana, International Journal of Accounting, Finance and Risk Management. Vol. 4, No. 1, 2019, pp. 34-43. doi: 10.11648/j.ijafrm.20190401.14
Copyright
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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