The effects of Ponzi schemes and revocation of licences of some financial institutions on financial threat in Ghana

Abstract

Purpose The purpose of this study was to assess the effects of the Ponzi schemes and revocation of licences of some financial institutions in Ghana on financial threat. Design/methodology/approach The study adopted a quantitative research approach. Convenient sampling method was used to select 435 individuals from three regions in Ghana. Standardize questionnaire developed by the researcher was used as the main data collection instrument. The binary logistic regression was used to test the relationship between the dependent variable and the independent variables. Findings The results of the study showed a positive relationship between financial threat and job loss, general health, information search and loss of investment. However, negative relationship was identified between financial threat and total debt, stress, economic hardship and anxiety. Findings from this study imply that job loss, general health, information search and loss of investment are major factors that determined financial threat in Ghana. Practical implications This indicates that individuals in Ghana have become uncertain regarding the use of current and future financial services in Ghana because most individuals have lost their jobs in the financial institutions, cannot get access to safe drinking water and education, need to gather more information before investing in financial institutions in Ghana and losing of funds invested. Originality/value This study is the first to test the effects of the Ponzi schemes and the revocation of licences of some financial institutions in Ghana on financial threat using binary logistic regression.

Impact of Microfinance on the Social Performance of Local Households: Evidence from the Kassena Nankana East District of Ghana

“…Therefore, the general perception is that the advent of microfinance will contribute to equal financial service opportunities and eventually reduce poverty. Nonetheless, Ghana's MFI sustainability and poverty reduction ability have received massive criticism over the years [25][26][27]. For example, in 2015, some eight MFIs had their licenses revoked over suspected Ponzi schemes.…”

“…For example, in 2015, some eight MFIs had their licenses revoked over suspected Ponzi schemes. In 2016, an additional 70 MFIs' licenses were revoked for their inability to meet requirements introduced as part of the central bank's measures to sanitize the sector [27].…”

What drives microfinance institution lending behavior? Empirical evidence from Sub-Saharan Africa

“…Given that the microfinance industry is diverse in status comprising both regulated and unregulated MFIs, the finding also confirms Thibaut and Mathias (2014), who argue that capitalization matters in financial institution lending behavior even when regulatory capital requirements are not binding. Financial institutions with lower capitalization could be more risk averse and limit their loan supply in order to fulfill market constraints since the market (including institutional and retail depositors, among others) requires adequate capitalization for the risk the financial institution assumes; the level of capitalization is a good indicator of bank/MFI insolvency, which is one of the reasons for revocation of licenses of some financial institutions in Ghana (Ofori, 2020).…”

The effect of corporate reputation on customer loyalty in the Ghanaian banking industry: the role of country-of-origin

“…Building a strong reputation is a paramount concern for Ghanaian banks, particularly in the aftermath of the banking sector crisis, where banks' reputation has been viewed negatively by customers (Ofori, 2023;Osakwe et al, 2020). Yomboi et al's study (2021) revealed that the crisis had significant impacts on customers, leading to the loss of capital, reduced motivation for further savings, difficulties in repaying creditors and a general decline in the ability to cater to customer needs, such as educational plans.…”

“…Building a strong reputation is a paramount concern for Ghanaian banks, particularly in the aftermath of the banking sector crisis, where banks' reputation has been viewed negatively by customers (Ofori, 2023; Osakwe et al. , 2020).…”