Credit Risk Management of Savings and Loans Companies in Ghana 1. Introductions According to Kliestik and Cug (2015) credit risk constitutes the loss probability that a financial institution encounters when a borrower fails to meet his contractual obligation. Largely, financial institutions are the most susceptible when it comes credit risk (Spuchľaková & Cúg, 2014) since it constitutes a significant portion of their operational losses (Klieštik & Cúg, 2015). As indicated by Bartošová (2005)credit risk does not only becomes imminent during loans approval, it equally occurs during other banking transactions such as when trading on the capital market, dealing with foreign exchanges, futures, swaps, bonds, options, stocks, etc. Clearly, this suggests that credit risk constitutes a significant portion of banking activities. Specifically, how the Ghanaian financial institutions operate make their operation more vulnerable to credit risk issues. For instance, for five consecutive years (i.e. 2012-2016) loans and advances have remained as the main source of the industry's operating assets (PwC, 2017). Moreover, most of these financial institutions rely on customers' deposits before they are able to advance credits to their customers for income. For example, recent figures by the regulator confirmed this claim as their statistics revealed that banks total deposits funded 62.5 percent of the industry's assets in December 2017 compared with 63.6 percent in December 2016 (Bank of Ghana, 2018). The consequential effect of this structural arrangement is that banks will have to pay significant amount of interest to their depositors before they acquire their savings. As rightly indicated in the recent Ghana Banking Survey report, interest expense on deposits constituted 75% of total interest expenses of the banking industry (PwC, 2017). This means that Ghanaian financial institutions may require stringent and effective credit risk management practices since they acquire most of their funds from customers' deposits and likewise rely on loans and advances as their major source of income.