An Evaluation of Sustainability and Subsidy Dependence of Microfinance Institutions in Ghana.docVIP

An Evaluation of Sustainability and Subsidy Dependence of Microfinance Institutions in Ghana 　　[a] Faculty of Accounting and Finance， University of Professional Studies， Accra， Ghana. 　　*Corresponding author. 　　Received 6 November 2012； accepted 10 January 2013 　　Abstract 　　The research aims to explore the understanding of the relationship between sustainability of microfinance institutions （MFIs）， subsidy dependence index （SDI） and operational self-sufficiency （OSS）.The research study is based on initial exploratory study by analyzing data on 14 executive directors in qualitative interviews and 116 relationship executives in research questionnaires. The microfinance institutions identified were the Financial Non-Governmental Organizations （FNGOs）， the Savings and Loans Companies （SL）， the Credit Unions （CUs）， the Rural Banks （RBs） and the SUSU Companies. Multiple Regressions which allows for the testing of theories or models established a significant relationship between the Operational Self Sufficiency （OSS） and the predictors， especially the drop-out rate of clients and average loans. The Subsidy Dependence Index （SDI） was calculated for the various types of MFIs and the result was a high dependency ratio especially among the FNGOs. Though the dependency is on the decline， it is very slow indicating that most MFIs will depend on subsidies for a very long time to come. 　　Key words： Subsidy dependence； Sustainability； Operational self-sufficiency； Viability； Microfinance 　　INTRODUCTION Microfinance developed as a source of finance and a development tool especially in developing countries after the pioneering works of McKinnon （1973） and Shaw（1973）. According to Ledgerwood （1999）， microfinance has evolved as an economic development approach intended to benefit low-income men and women. Provision of Microfinance services has spread across Africa in the last few decades as a way to harness and provide small financial services necessary for growth. Some of t