Abstract:
The study examined the determinants of non-performing loans of microfinance
companies in Ghana. The qualitative approach was adopted for the study.
Through the use of purposive sampling technique, 10loan officerswere selected to
participate in the study. The structured interview guide was used to gather the
requisite data for the study. The data were analyzed through the thematic
approach based on the various themes according to the research questions that
guided the study.The study among other things found out that non-performing
loans were high around 2011 through to 2013, however, were less in 2010, 2014
and 2015. The year 2015 observed a massive decline indicating that the MFIs
have taking proactive measures to help recover majority of their loans as mostly
agree in the loan agreement. Also, the study found that external and internal
factors such as poor management and economic downturns accounted for majority
of non-performing loans in Ghana. Once more, there was a statistically significant
negative effect of inflation on non-performing loans.However, no significant
effect was observed by interest rate on non-performing loans.The study
recommended that,NPL Management of MFIs should acquire the technical skills
and managerial expertise needs to examine the trend and incidence of nonperforming
loans so that critical measures can be taken in that effect. Also,
government and other policy makers should help invest more in growth enhancing
sectors of the economy so that government loans can be repaid on time to MFIs.
Again, MFIs should consider international competitiveness in order to impact on
abilities of borrowers to several exports and imports sectors of the economy so
that they can repay loans.
