Abstract:
ABSTRACT
The millennium development goals (MDGs) have brought the emphasis on
people back to the center of development, whilst microfinance, by providing
financial services to the less endowed people, has created an assurance that
many people will be able to improve their economic condition. it was in the
1990‟s that the establishment of Microfinance Institutions was formalized.
However recent collapse of microfinance institutions have been disturbing and
does not auger well both for the industry and customers alike. The year 2013
alone recorded a collapse of over 30 microfinance institutions with customers
loosing monies in the region of billions of Ghana Cedis. It is for this reason
this study seeks to find out the impacts of such collapses on the customers of
microfinance institutions. The study identifies types of clients that was
affected by the collapse of Microfinance Institutions, the media through which
clients got to know of the collapse of Microfinance Institutions and assess the
effect of the microfinance collapse on clients. To enable this analysis, 150
respondents consisting of customers of collapsed MFIs use through
questionnaires. Descriptive statistics were used in the analyses; specifically pie
charts, bar charts, tables, and cross tabulation using Statistical Package for
Social Sciences (SPSS) software. The study reveals that most of the affected
heard of the collapse of Microfinance Institution from the radio, and this
reveals that the importance of radio in information dissemination in Ghana
cannot be overemphasized. The Causes of the Collapse of MFI’s in Cape
Coast were Overtrading, Poor Credit Appraisal, Diversion of Funds,
Inadequate Monitoring of Loans, Willful Loan Default, Non-compliance with
operational policy and Ineffective Board. it is therefore recommended that
investigative measures by the media upon rumors of dangers of collapse of
microfinance institutions will aid the Bank of Ghana, the clients of
Microfinance Institutions and other stakeholders to be well informed about the
actual state of affairs. This will go a long way to minimize the effect on the
lives of clients.
