Corporate governance practices and financial performance of credit unions in Ghana: a case study of University of Ghana Credit Union

Abstract

A lot of individuals are joining credit unions because of its advantages over the formal banking sector and other microfinance institutions. This study primarily sought to identify and examine the corporate governance systems and financial performance of the University of Ghana (UG) credit union. More specifically to identify the corporate governance systems in place, examine the risk management structures, and examine the financial performance of the credit union over the last decade using the PEARLS evaluation system. The primary data for the study was the financial statements of the University of Ghana credit union from 2005 to 2015. The results of the study indicate that University of Ghana credit union does not have a very robust corporate governance system. There is no well-defined skills and academic competencies requirements for selection onto the management board and different committees of the union. The credit union has adequate risk management systems in place to manage credit and liquidity risks. UG credit union has an adequate effective financial structure although it is not maximising its loan asset portfolio. On the whole, the union’s financials are good which is reflected in its growth. It is recommended that the even numbered board composition of the management board, the loans and supervisory committees should be made odd numbered. There should be a well-defined skills and academic competencies requirements for all members who want to serve on any committee. Management should also maximise its loan portfolio because it is its most productive asset.