The Credit Policies and Credit Finance Creation Practices by Commercial Banks in Ghana: Perspectives of Staff and Clients of the Prudential Bank Limited

摘要

Commercial banks play a crucial role in credit financing of individuals, institutions and generally, their clients. They use a system of credit management to govern their operations in this regard. Specifically, they do this through established credit policies or systems and to an extent, the relevant policy determines a given quantum of credit finance on case-by-case basis but most importantly, whether or not to grant the credit finance request upon assessment. Conveniently sampling the perspectives of both credit officers (15) and customers (67) of the Prudential Bank Limited, primary and secondary data sources were used, with the primary data obtained through unstructured interviews and two sets of self-administered questionnaire for the respective respondent-categories. The findings reveal that both categories of respondents recommend the need for the bank to decentralise its credit finance application processing and approval system. Due to the bank's existing credit policy, customers had to wait, on average, one month for the approval or otherwise of their requests, with the salariedworker customer-group granted more credit finance than the others. Also, the bank had granted more credit in the form of loans. Sadly, business persons and other categories of customers were waiting three months for response to their credit finance requests. The customers and their bankers disagreed in their respective perspectives regarding the main reason(s) for granting or declining credit finance requests as well as on matters of collateral security. Among others, the study recommends the shortening of credit facility processing time to enhance the bank's competitive drive in the banking industry and also to make these facilities more responsive to the needs of the customers. Future research is expected to conclude on the extent of impact that banks' credit policies have on their credit finance creation.