This study examines the impact of credit unions on members' businesses in Sunyani Municipality. Access to financial services is crucial for the poor in developing countries to engage in income-generating activities and break the cycle of poverty. Credit unions play a vital role by providing loans to poor individuals at …
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This study examines the impact of credit unions on members' businesses in Sunyani Municipality. Access to financial services is crucial for the poor in developing countries to engage in income-generating activities and break the cycle of poverty. Credit unions play a vital role by providing loans to poor individuals at affordable interest rates. However, small and medium-scale enterprises (SMEs) in Ghana face significant constraints in accessing credit facilities from commercial banks, including high costs and limited availability. This study aims to assess the benefits and challenges experienced by credit union members. The research selected a sample size of 393 members from two credit unions: Sunyani Area Teachers Co-operative Credit Union (12,096 members) and Abosomankotere Co-operative Credit Union Sunyani Branch (11,212 members). The findings indicate that credit unions offer various benefits to their members, including emergency funds and assistance in addressing poverty. Credit unions consider factors such as creditworthiness and capacity when providing credit facilities. Economic hardships and medical needs were identified as motivations for seeking credit. One challenge faced by members is that the payment structure is not conducive to business needs. The study suggests that credit unions encourage the formation of member groups to collectively pressure defaulting members to make timely payments. Additionally, the study recommends greater collaboration between the municipal assembly, government agencies, and credit unions to provide loans to SMEs and aspiring entrepreneurs who lack support. Furthermore, the researcher suggests conducting comparative studies on the credit facility processes between traditional banks and credit unions, including an analysis of their respective interest rates. This would provide valuable insights into the differences and potential advantages of accessing credit from credit unions. Keywords: Credit unions, Cooperative financial institutions, Savings and loans, Bank of Ghana, Credit Union Association, Savings and Credit Co-, Microfinance Institutions, District Assembly Common Fund, Credit Union Association.
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