Abstract:
This article discusses the license revocations of microfinance institutions in Ghana. The revocation/withdrawal leads to the collapse of most microfinance institutions. While some of the institutions ceased operation due to insolvency, credit defaults, majority was due to unable to raise the minimum capital requirement by BoG. This study used random sampling techniques and questionnaires were used to collect data from 130 respondent from various institutions involved in the study and the loan beneficiaries. The data collected was analyzed using SPSS. The study reveals the factors leading to collapse of MFIs as lack of sufficient training, credit defaults, bad management, other MFIs collapse, bank runs/panic, and weak regulations. While indicated the reasons for licenses revocations as failure to comply with the rules from BoG, inability to pay license required amount, unable to meet provisional licensing deadlines, insolvency, MFIs deviating from registered duties, unsound and instability of MFIs. We concluded that, the revocation of microfinance institutions in the country as a strong effect on employment and the collapse of the institutions, has a long term effect on the economy. Finally, the study recommends that the government and stakeholder should support the MFIs to help reduce the collapse rates for long term sustainability.
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