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Please use this identifier to cite or link to this item: http://hdl.handle.net/123456789/5299

Title: Optimum Loan Portfolio Selection (A Case Study of Cal Bank Limited, Ghana)
Authors: Addai-Yeboah, Linda
Issue Date: 2-Dec-2013
Abstract: Banking institutions as part of their core functions receive deposits from investors and customers and in return pay interest on the deposits. The other most important function of Banks is the advancing of loans and other credit facilities with the aim of earning interest and also increasing their profitability. The prudent allocation of funds to the various sectors of the economy is a key determinant of how this profitability can be achieved. The objectives of the study are; (i) to come out with a quantitative model that will maximize the returns on loans given out by CAL Bank Limited, and (ii) to determine optimum loan portfolio for CAL Bank Limited for the year 2012. Data were gathered from both primary and secondary sources. The data collected included the loan types, the respective interest rates and probability of bad debt. The data gathered was modeled as a Linear Programming Problem using Karmarkar’s interior point method. MATLAB was used to solve the problem. It was observed that with an amount of four hundred and eleven million, five hundred and eighty-two thousand Ghana cedis (GH¢411,582,000.00) to be disbursed in 2012, CAL Bank could make a maximum profit of ninety-three million, one hundred and eleven thousand, two hundred Ghana cedis, (GH¢93,111,200.00). This profit can be achieved if CAL Bank Limited adopts the proposed method in its loan allocation to their nine various sectors in 2012.
Description: A thesis submitted to the Institute of Distance Learning, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirement for the award of Master of Science degree in Industrial Mathematics, June-2013
URI: http://hdl.handle.net/123456789/5299
Appears in Collections:Institute of Distance Learning

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