Evaluating the Risk Exposure and Challenges of Credit Providers in Microfinance in Ghana (A Case Study: Accra Metropolis, Ghana)

Abstract

In view of the clear deficiencies in the cited researchers’ findings, there is the need to conduct new research to assess risk exposure of credit providers in micro financing in Ghana using Accra Metropolis, Ghana as a case study. The principal approach used for this analysis was a questionnaire-based survey. 120 workers and managements of Microfinance institutions responded to questionnaires made up of 9 questions. The analysis of the responses from the survey conducted was done using descriptive statistics. The results from the study shows that there is significant relationship between bank performance in terms of profitability and credit risk management in terms of loan servicing performance. The results verify the hypothesis that better credit risk management results in better bank performance. Accra Metropolis, Ghana is a city with challenges in the likes of the springing up of new micro finance and micro finance facilities. The study found that the microfinance institutions surveyed are aware of the types of risk inherent in their business line and use risk management approaches in different ways to reduce losses and increase profitability. Therefore, a more comprehensive assessment of risk exposure of credit providers in micro finance within the Accra Metropolis, which when not done will lead to a further fall in their performance standards as financial service providers.

Keywords: Risk Exposure, Credit Providers. Microfinance in Ghana

DOI: 10.7176/RJFA/11-16-03

Publication date:August 31^st 2020