Credit Risk Management in Ghanaian Commercial Banks

Michael Nyarko-Baasi

• Publisher: GRIN Verlag
• Year: 2013
• Edition: 0
• eBook ISBN:
  9783656397540
• Topic: Business
• Subtopic: Finance
• Index: Business

Master's Thesis from the year 2012 in the subject Business economics - Investment and Finance, grade: B, Methodist University College Ghana, language: English, abstract: This study focused on the challenges of Credit Risk Management in Ghanaian CommercialBanks with the searchlight on the operations of Barclays Bank Ghana (BBG), GhanaCommercial Bank (GCB), Zenith Bank Ghana and Merchant Bank Ghana (MBG), alloperating in the Accra Business District. The study essentially had the objective of examiningthe loan application appraisal processes of these banks as well as ascertaining the adequacy oftheir loan monitoring mechanism.In conducting the study, the researcher adopted the questionnaire technique as the researchinstrument to solicit information from both customers and officials of the banks. Purposivesampling technique was employed in selecting officials from the banks whose duties centeredon Credit Risk Management. Random sampling technique also helped the researcher inselecting the sample size for the customers of the banks.Findings made uncovered the fact that poor sales and exchange rate losses, productsubstitutes due to trade liberalization and inability to enter into the foreign market andaccount for a chuck of the loan default cases experienced by the banks. It is recommended, among others, that the Government's information on Venture Capital Trust fund should bemade more accessible to the SMEs sectors through official sponsored workshops whilst thecapacity and logistics of the Eximguaranty Limited are strengthened to alleviate the creditrequirement 'headaches' of SMEs. Conclusions drawn centered on the fact that some banksminimize risk factors in credit management by entering into some covenants with borrowers'under which certain figures and ratios are periodically sent to the banks electronically. Mostbanks also dispatch their officials to monitor and evaluate the loan disbursement schedulesagreed with the customer to minimize bad debt associated with SMEs.