An optimum bank fund allocation plan from a loan portfolio: the case study of Atwima Kwanwoma Rural Bank
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Date
2005-11-03
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Abstract
The thesis is designed to model a linear programming problem and to apply optimization techniques to the operations of real life problems of banks giving out loans to different clientele.
The main objective of the study was to determine the maximum net returns which comprises of the difference between the revenue from interest and lost funds due to bad debts. The bad debts are not recoverable both as principal and interest, thus reducing the total revenue. It is also to u se the optimum solution to determine among the different clientele, the ones that are recommended and the ones that are least attractive.
Atwima Kwanwuma Rural Bank was chosen as the bank for the study. Atwima Kwanwuma Rural Bank give out loans to different group of peoples such as: Travel loans, other loans, Churches loans, Group loans and Susu loans among others. A linear programming model which is one of the quantitative analysis techniques was developed and the Simplex Method used to solve the problem.
It was found out that the bank could make an optimum profit of 23.002 billion annually. That is about 37.1% of 62 billion, the total amount disbursed as loans to the above
Description
A thesis submitted to the Board of Postgraduate
Studies, University of Science and Technology, Kumasi,
Ghana, in partial fulfilment of the requirements for
the Award of the degree of
Master of Science (M.Sc) in Mathematics, 2005