Abstract
Purpose: The study examined the factors that influenced the sustainability and outreach of microfinance institutions in northern Ghana from the view point of managers and operation staff of microfinance institutions. Methodology : Questionnaires were administered to a sample of 181 managers and operation staff of 18 microfinance institutions in northern Ghana. Purposive and convenience sampling techniques were used. Data was analysed using Spearman multiple correlations. Findings : The study found: a positive statistically significant relationship between capital structure and financial sustainability in northern Ghana, failed to uncover any statistically significant relationship between capital structure and outreach, failed to find statistically significant relationship between financial sustainability and outreach levels in northern Ghana, find a positive statistically significant relationship between capital structure, financial sustainability and outreach in northern Ghana. Originality : The study adds to the literature on microfinance sustainability and outreach and in particular the Ghanaian context. Limitation : The study is limited to only microfinance institutions operating in northern Ghana and the perceptions of finance professionals. The study suggests consideration of the entire regions of Ghana and the usage of actual loan data of microfinance institutions. Keywords: Microfinance institutions, Ghana, poverty reduction, capital structure, sustainability, outreach. DOI: 10.7176/RJFA DOI : 10.7176/RJFA/10-16-16 Publication date : August 31 st 2019
Highlights
In the last three decades, microcredit and microfinance have certainly received extensive recognition as a strategy for poverty reduction and for economic empowerment of the productive poor; in particular, in developing economies of which Ghana is not an exception
5.1 Relationship between Capital Structure and Financial Sustainability of Microfinance Institutions (MFIs) in Northern Ghana The study found a positive statistically significant relationship between capital structure and financial sustainability from the point of view of managers and operation staff of MFIs surveyed in northern Ghana
6 Conclusions and Practical Recommendation The study concludes that there is positive statistically significant relationship between capital structure and financial sustainability from the point of view of managers and operation staff of MFIs surveyed in northern Ghana
Summary
In the last three decades, microcredit and microfinance have certainly received extensive recognition as a strategy for poverty reduction and for economic empowerment of the productive poor; in particular, in developing economies of which Ghana is not an exception. Whilst microfinance is not the only economic policy in Ghana aimed at reducing poverty, it is certainly one effective tool amongst many for poverty reduction and eradication. In Ghana, traditional financial institutions have neglected the majority of the population (Aveh, 2011). Considered as high-risk clients by traditional financial institutions, the productive poor have been denied access to financial services. Microfinance has been praised during the last twenty years as a new development policy tool - serving people who have been excluded from the formal banking system (Hudon, 2010)
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