Research Journal of Finance and Accounting www.iiste.org ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) DOI: 10.7176/RJFA Vol.10, No.16, 2019 141 Evaluation of Factors Influencing the Sustainability and Outreach of Microfinance Institutions in Northern Ghana Dr. Issahaku Salifu 1* Dr. Muntari Mahama 2* Mr. Mohammed Dawuni 3 1. Faculty of Business, Tamale Technical University, P. O. Box 3, E/R, Tamale, Northern Region, Ghana 2. Faculty of Business, Tamale Technical University, P. O. Box 3, E/R, Tamale, Northern Region, Ghana 3. Faculty of Applied Sciences, Tamale Technical University, P. O. Box 3, E/R, Tamale, Northern Region, Ghana Abstract Purpose: The study examined the factors that influenced the sustainability and outreach of microfinance institutions in northern Ghana from the view point of managers and operation staff of microfinance institutions. Methodology: Questionnaires were administered to a sample of 181 managers and operation staff of 18 microfinance institutions in northern Ghana. Purposive and convenience sampling techniques were used. Data was analysed using Spearman multiple correlations. Findings: The study found: a positive statistically significant relationship between capital structure and financial sustainability in northern Ghana, failed to uncover any statistically significant relationship between capital structure and outreach, failed to find statistically significant relationship between financial sustainability and outreach levels in northern Ghana, find a positive statistically significant relationship between capital structure, financial sustainability and outreach in northern Ghana. Originality: The study adds to the literature on microfinance sustainability and outreach and in particular the Ghanaian context. Limitation: The study is limited to only microfinance institutions operating in northern Ghana and the perceptions of finance professionals. The study suggests consideration of the entire regions of Ghana and the usage of actual loan data of microfinance institutions. Keywords: Microfinance institutions, Ghana, poverty reduction, capital structure, sustainability, outreach. DOI: 10.7176/RJFA DOI: 10.7176/RJFA/10-16-16 Publication date: August 31 st 2019 1. Introduction In the last three decades, microcredit and microfinance have certainly received extensive recognition as a strategy for poverty reduction and for economic empowerment of the productive poor; in particular, in developing economies of which Ghana is not an exception. Whilst microfinance is not the only economic policy in Ghana aimed at reducing poverty, it is certainly one effective tool amongst many for poverty reduction and eradication. Microfinance as used in this study means the provision of credit, rendering of micro services such as savings, insurance, fund transfer services by microfinance institutions in return for interest income while microcredit is the provision of small amount of loans to the productive poor people to undertake economic activity in return for interest income by the Microfinance Institutions (MFIs). In Ghana, traditional financial institutions have actually neglected the majority of the population (Aveh, 2011). Considered as high-risk clients by traditional financial institutions, the productive poor have been denied access to financial services. As a result, microfinance has been praised during the last twenty years as a new development policy tool - serving people who have been excluded from the formal banking system (Hudon, 2010). Davutoğlu (2013) noted that for a very long-time poverty has been the most important problem that urgently needs a sustainable solution for the sake of society’s own self-existence. Whether it is conceptualized rural poverty, urban poverty, absolute poverty or relative poverty, millions of people in different parts of the world have to face poverty on a daily basis, which makes the problem a global issue. There have always been attempts, especially from the developed countries, to address the causes and effects of poverty in developing countries. Microfinance institutions (MFIs) have been set up in many countries to play the intermediary role between the suppliers of funds and the poor. The primary objective of these MFIs is poverty eradication by providing financial services to as many productive poor people as possible. However, considering the fact that donor resources are limited, the need has arisen for the microfinance institutions to be financially sustainable. In order to reduce poverty, MFIs must also be profitable because without donor funding profitable operation is the only way to be sustainable. The challenge facing MFIs now is how to lend to a significant number of the productive poor without compromising the need to be viable and sustainable financial institutions (Aveh, 2011). Similarly, poverty reduction was institutionalized in 1944, with the establishment of the World Bank at the birth of the Bretton Woods system. With the IMF assigned the tasks of stabilizing the world’s economy and promoting free trade in the post WW II, the problem of poverty was delegated to the World Bank. The industrial