Optimizing banks’ loan portfolio in Ghana [a case study of Nkoranman Rural Bank, Sunyani]

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The task of the thesis is to design a model to find the optimal solution for allocating funds for the various types of loans offered by Nkoranman Rural Bank, Sunyani, in order to maximize the net returns. The aims and the objectives of the project are to model the Loan Portfolio of Nkoranman Rural Bank, Sunyani using Linear Programming and solve the Linear Programming Model to maximize profit. A linear programming Model was formulated using the data collected from Nkoranman Rural Bank, Sunyani and Karmarkar’s algorithm, an interior point method is used to solve it. The results show that Nkoranman Rural Bank Limited, Sunyani, will realize an optimal annual profit of GHc 117,123.51 on its loan portfolio if the management of the bank adopts the Model and implement it accordingly. This amount represents 35.5 % of the total fund to be disbursed by the bank for the year 2015, as against the 28.2 % profit made in 2014.
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 in Industrial Mathematics, 2015