Assessing the impact of interest rate fluctuations on borrowings a case study of TF Financial Services Limited.
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Date
2016-08
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KNUST
Abstract
Interest rate is recognized as a major indicator in terms of borrowing in the financial sector of every economy. The aim of the study was to access the impact of interest rate fluctuations on borrowings, using TF Financial Services Limited (A subsidiary of the Teachers Fund) as a Case Study. In achieving the aim of the study, the following objectives were espoused: To investigate effect of interest rate fluctuations on borrowing; to determine the loan monitoring mechanisms of lending institutions.; to determine the challenges of borrowers and lenders due to fluctuations in interest rate and to determine the perceive causes of interest rate fluctuations in Ghana. The selected respondents were the employees of the Company. Thirty-two respondents were selected to represent the sampling size for the population of ninety-five employees of the company. In selecting the respondents, both purposive and convenient sampling was used. Data from interview and questionnaire were used together with the financial records of the Company for the data analysis. The study found out that, clients who patronize the services of the company are not
pleased with the fluctuations of the interest rate on borrowings. Again, the study has also indicated that clients are not able to pay promptly their outstanding amount in times of a higher interest rate as compared to when the interest rate is lower. The study further revealed that, the company uses varied forms of monitoring mechanisms such as a reduced charges and fees to encourage clients to pay their outstanding obligations to the company. The research indicated that ineffectiveness of loan monitoring mechanisms affects the company’s operations which thus limit its business potentials. It is also perceived that competition in the market especially among the financial institutions and the extent of the development of the financial sector usually makes it possible for the interest rate to fluctuate within the market.
Description
A Thesis Submitted In Partial Fulfillment Of The Requirements For The Degree Of Masters In Business Administration (Finance).