No abstract

In view of the recent evidence that the impact of microfinance is being overstated, this study assesses the causal link between receiving credit from a microfinance institution and poverty reduction among rural households in the Upper East Region of Ghana. Using consumption expenditure as the outcome variable, we test the hypothesis that receiving credit has a poverty reducing effect. Treatment effect estimation technique is used to examine data on 250 beneficiaries and 250 non-beneficiaries from five Districts in the Region. Although the method of study is based on a quasi-experimental approach, the process of selecting the beneficiary and non-beneficiary sample cautiously made an attempt to minimize the potential problems that will arise from contamination, spill-over effects and programme and self-exclusion selection biases. The results support the hypothesis that microfinance has 0.12% poverty reducing effect. Premised on this, we conclude that even in very poor areas microfinance is capable of reducing poverty. Therefore microfinance investment is recommended to broaden the scale and scope of beneficiaries reached and improve delivery strategies to suite context specific characteristics.JEL Classification: C1, D13, D14, G21

ABSTRACT

The implementation of the Financial Sector Adjustment Programme has beckoned to a number of foreign banks to flock into the country to do business. This has brought about intense competition in the banking industry with its attendant implications for profitability in the industry. In the light of this, the study seeks to make a comparative analysis of the profitability of foreign and local banks in Ghana. The study uses a sample of six banks of which three are foreign banks. Financial statements of the selected banks from 2008 to 2014 are used for the analysis employing profitability ratios such as Return on Assets (ROA), Capital Adequacy (CA), Return on Equity (ROE) and Management Efficiency (ME). We find wide fluctuations in the profitability ratios of the banks. Again, the foreign banks are found to have outperformed the local banks in ROA, CA and ROE. The local banks however, performed better than the foreign banks in ME, except in 2009. We conclude that, the foreign banks are more profitable than their local counterparts during the period under study. It is therefore recommended that, protective measures be put in place to make the local banks more competitive. For instance, the local banks could be required to make less minimum capital requirements than the foreign banks.

In line with previous studies, this article seeks to extend the frontiers of impact of microcredit to employment creation. The article argues that accessing microcredit and employment of additional hand(s) are preceded by two interrelated decisions. In view of this, the study tests the hypothesis that the decision to access microcredit has a positive impact on the decision to create employment. In furtherance of the above, the study uses data collected from 500 women from northern Ghana in a household survey, of whom 250 are beneficiaries of microcredit. The bivariate probit selection estimation technique is employed and the results indicate that access to microcredit has 46 per cent probability of employment creation. Respondents from the Builsa district are more likely to access microcredit and also employ additional hand(s) than their counterparts from the Talensi and Bongo districts. Also, intra-household power play has a positive impact on access to microcredit and employment creation. It is, therefore, recommended that microfinance institutions desirous of employment creation need to increase access to microcredit in the rural areas both in breadth and depth, particularly credit for production activities. Also, a healthy intra-household power play needs to be encouraged by development practitioners to positively influence female-owned businesses. JEL: D1, G21, J2