The impact of credit management on the financial performance of microfinance institution

The financial sector of Ghana is currently faced with many challenges including high incidence of non-performing loans, high cost of borrowing, high default rate, and high credit risk factors. Micro finance institutions play a crucial role in the provision of credit for the expansion of small and medium scale enterprises (SMEs) in the private sector of the economy. It is therefore essential to examine how credit management affects the financial performance of Micro-finance institutions in Ghana. The purpose of this thesis was to examine the impact of credit management on the financial performance of Micro finance Institutions in Ghana. The specific objectives of the study are to examine the credit management practices of uniCredit; to determine the credit policies in Finland; and to examine the impact of credit management practices on the financial performance of uniCredit. The theoretical framework of this research examined the basic concepts of credit management, credit risks, financial performance, and credit policies etc. The qualitative case study research method was identified as the most appropriate method to achieve the objectives of the study. Mainly, secondary sources of information were applied in the development and analysis of the research. In order to acquire relevant information on the credit management practices of uniCredit, the Credit Manager of the institution was contacted on telephone to assist the author. The study revealed that uniCredit’s credit management practices have positive impact on total assets, total deposits, profit before tax, and profit after tax, and return on equity