Optimal Loan Portfolio (Case Study: Prudential Bank Ltd And Asante Akyem Rural Bank)

Thumbnail Image
Journal Title
Journal ISSN
Volume Title
The Banking Industry in Ghana is now characterized by increasing competition and innovation. This phenomena has led to most banks adopting cutting edge technology to improve the quality of their Loan structure . The decline of relevant portfolio planning models especially in Ghana is attributed mainly to the evolving dynamics of the Ghanaian banking industry where the regulatory controls have changed with a high frequency. A lot of banks had suffered substantial losses from a number of bad loans in their portfolio due to the models used in allocating funds to loans. As a result, most banks are not able to maximize their profit margin due to poor allocation of funds. The purpose of this Study is to develop a linear programming model using the Simplex algorithm to help Prudential Bank Limited and Asante Akyem Rural Bank to maximize their profit margin. The results from the model showed that, Prudential Bank and Asante Akyem Rural Bank would be making annual profit of GH¢8003572.5 and GH¢176750 respectively if they are to stick to the model. From the study, it was realized that the scientific method used to develop the propose model can have a dramatic increase in the two banks profit margin if put into practice.
A Thesis submitted to the Department of Mathematics Institute of Distance Learning Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree,of MASTER of SCIENCE Industrial Mathematics