Financial inclusion and the threat of collapsing microfinance institutions in Kumasi Metropolis

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Date
August 2015
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Abstract
The frequent collapse of microfinance institutions in the country raises eyebrows about the sustainability of such institutions in Ghana. This study however assessed the concept of financial inclusion and the threat of collapsing microfinance institutions in the Kumasi Metropolis. Through an exploratory survey design, eighty-eight respondents participated in the study. The findings of the study proved that the respondents have had transactions with microfinance institutions within the Kumasi Metropolis for a considerable number of years. However, respondents also have other accounts with other commercial banks within the Kumasi Metropolis. Further, respondents had either heard or witnessed the collapse of microfinance institutions in the Metropolis which has affected their mindset about the operations of microfinance institutions negatively. Because of the negative perceptions that respondents have about the collapse of microfinance institutions, they are not willing to recommend them to other people and moreover respondents are not willing to continue transacting business with them because of their frequent collapse. The study also found that, the collapse of microfinance institutions in the country has also affected the operations of microfinance institutions because consumers are afraid of investing their money into the operations of microfinance institutions for fear of losing them. That notwithstanding, it was evident that, microfinance institutions are constantly putting measures in place to attract the rural and urban poor to do business with them by enticing them with attractive packages that will motivate them to save and also acquire loans for their businesses. The study therefore recommended the need for Bank of Ghana to publish a list of microfinances that are operating with required license so that consumers will be able to identify the bad nuts which are not operating with licenses and hence avoid transacting business with them.
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A Thesis submitted to the School of Business, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the award of Master of Business Administration Degree in Finance,
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