Abstract

The operations of Microfinance Institutions (MFIs) in Ghana have recently come under serious public scrutiny. This position was fairly caused by Bank of Ghana’s (BOG’s) announcement regarding 70 microfinance companies whose provisional licenses were revoked BOG (2016). This led to the closure of DKM Diamond Microfinance and some other microfinance companies in the country. This worsening circumstance surrounding the microfinance industry calls for the need to provide practical knowledge on the use of financial analysis tools to manage internal financial risks of the microfinance industry. Data from Akuapem Rural Bank (AKRB) financial statements for the period of 2008 to 2015 (refer to appendix) was analysed using regression analysis, descriptive statistics, trend analysis and ratios. It was observed that the profitability of AKRB is greatly influenced by credit risks, bank size, interest income growth and debt-ratio. The study also revealed that AKRB had comprehensive and adequate risk management structures in place in managing its credit and other operational risks.

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