Assessing the impact of collapse of microfinance institutions on its customers in Ghana (A Case Study of The Kumasi Metropolis)

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August, 2015
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Credit mobilization operations has gone through different phases since its inception in Ghana in the 1950‟s by Canadian catholic missionaries. However it was in the 1990‟s that the establishment of Microfinance Institutions was formalized. However recent collapse of microfinance institutions have been disturbing and does not auger well both for the industry and customers alike. The year 2013 alone recorded a collapse of over 30 microfinance institutions with customers loosing monies in the region of billions of Ghana Cedis. It is for this reason this study seeks to find out the impacts of such collapses on the customers of microfinance institutions. To enable this analysis, 350 respondents consisting of customers of collapsed MFI‟s were interviewed using semi-structured questionnaires. Descriptive statistics were used in the analyses; specifically pie charts, bar charts, tables, and cross tabulation using Statistical Package for Social Sciences (SPSS) software. The empirical findings from the test shows that collapse of microfinance institutions leads to loss of capital, business collapse, jeopardized education, collapse of marriage among other things. By using the Chi-squared test of independence, the study also found that the impact of collapse microfinance institutions is dependent on the amount of capital lost. It is recommended that effective monitoring and operations of superiors as well as a well-structured channel of communication in microfinance institutions should also be adhered to without compromise.
A thesis submitted to the Department of Accounting and Finance Kwame Nkrumah University of Science and Technology School of Business in partial fulfillment of the requirements for the degree of Master of Business Administration (Finance Option),