An Empirical Analysis of the Loan Default Rate of Microfinance Institutions

Abstract

Microfinance institutions have been extending loans to different deficit units in Ghana and this study aimed at addressing the following issues: identifying the causes of loan default and the processes involved in granting loan by Microfinance institutions in Ghana. The convenient and purposive sampling techniques were employed to select respondents to provide answers to questionnaires. The population of the survey constituted the management and non-management staff and customers of some selected microfinance institutions in Ghana. Hypotheses of the study will be analyzed using correlation and regression. Results of the study show that there are high positive correlation between the constructs of loan default causes and how loans are granted.

Keywords: Loan Default Rate, Monitoring and Repayment, Microfinance institutions.