Browsing by Author "Adjei, Raphael Turkson"

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    The basis for loan default repayments in microfinance institutions (MFIS) in Ghana: a case of microfinance institutions in Kumasi metropolis.
    (KNUST, 2018-02) Adjei, Raphael Turkson
    This study sought to evaluate the extent of which loans are defaulted among Microfinances Institutions in Ghana, investigate the factors that influence the default of loans among Microfinance Institutions in Ghana and also to examine the effects of loan default on MFIs in Ghana using Kumasi Metropolis as the study area. Thirty-two (32) MFI institutions were sampled. In each of the MFI, 20 customer and the credit officers were interviewed using a structured questionnaire. The responses from the credit officers were used to assess the extent and effects of loan default on the MFIs. Also, in order to evaluate those factors that are likely to influence loan default, a probit regression model was used with probability of loan default being the dependent variable. The independent variables were, age of respondents, marital status, household size (size of dependents), health condition of customer, health issues of dependents of customers, employment or business type, income, receipt of remittances, loan inadequacy, possession of multiple loans, financial literacy training and post loan customer supervision or monitoring. The results from the probit regression revealed that the significant determinants of loan defaults were age of customer, income level, level of education, loan inadequacy, possession of multiple loans, and health issues of customer. It was also revealed that over 65% of the MFIs have a default rate above 4% (above the international acceptable default rate of 3%). Furthermore, it was observed that the prevailing loan default rate of the various MFIs affected their profitability, lending potentials and led to worker lay off. The study therefore proposed that MFIs revise their lending policies and practices to incorporate those characteristics that are likely to influence their lending potential, adopt credit insurance and enhance the capacity of credit officers.