Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana

Emmanuel Atta Anaman; Mavis Pobbi

doi:doi:10.11648/j.ijafrm.20190401.14

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Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana

Emmanuel Atta Anaman, Mavis Pobbi

Published in International Journal of Accounting, Finance and Risk Management (Volume 4, Issue 1)

Received: 7 April 2019 Accepted: 23 May 2019 Published: 12 June 2019

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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.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 4, Issue 1)
DOI	10.11648/j.ijafrm.20190401.14
Page(s)	34-43
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Microfinance Institutions, Profitability, Liquidity, Credit

References

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APA Style

Emmanuel Atta Anaman, Mavis Pobbi. (2019). Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana. International Journal of Accounting, Finance and Risk Management, 4(1), 34-43. https://doi.org/10.11648/j.ijafrm.20190401.14

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ACS Style

Emmanuel Atta Anaman; Mavis Pobbi. Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana. Int. J. Account. Finance Risk Manag. 2019, 4(1), 34-43. doi: 10.11648/j.ijafrm.20190401.14

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AMA Style

Emmanuel Atta Anaman, Mavis Pobbi. Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana. Int J Account Finance Risk Manag. 2019;4(1):34-43. doi: 10.11648/j.ijafrm.20190401.14

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@article{10.11648/j.ijafrm.20190401.14,
  author = {Emmanuel Atta Anaman and Mavis Pobbi},
  title = {Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {4},
  number = {1},
  pages = {34-43},
  doi = {10.11648/j.ijafrm.20190401.14},
  url = {https://doi.org/10.11648/j.ijafrm.20190401.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20190401.14},
  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.},
 year = {2019}
}

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TY  - JOUR
T1  - Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana
AU  - Emmanuel Atta Anaman
AU  - Mavis Pobbi
Y1  - 2019/06/12
PY  - 2019
N1  - https://doi.org/10.11648/j.ijafrm.20190401.14
DO  - 10.11648/j.ijafrm.20190401.14
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 34
EP  - 43
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20190401.14
AB  - 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.
VL  - 4
IS  - 1
ER  -

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Author Information

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

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APA Style

Emmanuel Atta Anaman, Mavis Pobbi. (2019). Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana. International Journal of Accounting, Finance and Risk Management, 4(1), 34-43. https://doi.org/10.11648/j.ijafrm.20190401.14

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ACS Style

Emmanuel Atta Anaman; Mavis Pobbi. Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana. Int. J. Account. Finance Risk Manag. 2019, 4(1), 34-43. doi: 10.11648/j.ijafrm.20190401.14

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AMA Style

Emmanuel Atta Anaman, Mavis Pobbi. Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana. Int J Account Finance Risk Manag. 2019;4(1):34-43. doi: 10.11648/j.ijafrm.20190401.14

Copy | Download

@article{10.11648/j.ijafrm.20190401.14,
  author = {Emmanuel Atta Anaman and Mavis Pobbi},
  title = {Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {4},
  number = {1},
  pages = {34-43},
  doi = {10.11648/j.ijafrm.20190401.14},
  url = {https://doi.org/10.11648/j.ijafrm.20190401.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20190401.14},
  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.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - Analysis of Financial Performance and Sustainability of Microfinance Institutions in Ghana
AU  - Emmanuel Atta Anaman
AU  - Mavis Pobbi
Y1  - 2019/06/12
PY  - 2019
N1  - https://doi.org/10.11648/j.ijafrm.20190401.14
DO  - 10.11648/j.ijafrm.20190401.14
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 34
EP  - 43
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20190401.14
AB  - 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.
VL  - 4
IS  - 1
ER  -

Copy | Download