Trust in Ghana’s credit unions is driven more by openness and accountability than by lengthy policy manuals, according to a recent study on the country’s cooperative financial sector.
The research, presented at the iCAD26 Conference hosted by Anglia Ruskin University, argues that internal controls in credit unions should not merely exist on paper but must function as ethical accountability systems that make leaders answerable to members.
The study, titled “Ethical Governance, Morality and Answerability in Cooperative Financial Systems: Do Internal Control Dimensions Matter?”, was presented by Professor Dr. Dr. Frank Yao Gbadago and involved researchers including Anewiase Mark, Eric Effah Sarkodie and Abdallah Ali-Nakyea, Senanu Zoiku, Agnes Fafa Anthony, and Patience P. Mankatah.
According to the researchers, credit unions in developing economies such as Ghana play a unique role by providing financial services to informal workers, small businesses and underserved households that often struggle to access traditional banking services.
However, they warned that weak oversight within such institutions can quickly erode public confidence and undermine the cooperative model.
“Member-owned finance depends on trust. When oversight and information flows are weak, the issue is not only inefficiency — it becomes a failure of fiduciary duty, fairness and answerability,” the study noted.
Researchers surveyed 142 officials drawn from registered credit unions in the Oti Region, including finance officers, accountants, internal auditors and senior managers, to examine which internal control systems have the greatest impact on accountability and public value.
Using advanced statistical analysis, the study found that not all internal control mechanisms contribute equally to good governance outcomes.
Instead, two factors stood out: effective information and communication systems, and strong monitoring practices such as internal audits and supervisory reviews.
The researchers found that clear and timely communication significantly improves trust and accountability by reducing information gaps between management and members.
“Clear, timely and honest reporting makes decisions visible and understandable,” the study stated, noting that transparency helps members understand how decisions are made and how their savings are managed.
Similarly, monitoring mechanisms were found to play a crucial ethical role by ensuring that misconduct, service failures and control weaknesses are detected and corrected promptly.
“Monitoring makes conduct reviewable, deviations correctable and accountability credible,” the researchers explained.
Interestingly, other traditional control measures such as ethical tone from leadership, risk assessment processes and procedural controls were not found to directly influence public trust unless they were supported by transparent communication and effective monitoring.
The study concluded that governance in cooperative finance should move away from structure-heavy compliance approaches towards more visible and responsive systems of accountability.
“Control presence is not enough. Ethical transparency and monitoring explain public-value outcomes, while cooperative finance needs visible, reviewable and correctable governance,” the researchers stressed.
The researchers recommended that credit unions strengthen the independence of internal audit units, improve communication with members, establish effective grievance systems and encourage participatory oversight.
Regulators were also urged to focus less on the existence of control manuals and more on how institutions respond to audit findings and communicate with their members.
For boards of directors, the study recommends tracking early warning indicators and demanding evidence of corrective actions rather than relying solely on compliance documentation.
