Credit Risk Management and Performance of Financial Institutions in Uganda Centenary Rural Development Bank Limited (Mapeera House Central Division Kampala District)
Author: NANKYA FLORENCE
Supervisor: Moses Kibrai
The study examines the relationship of credit risk management and performance of financial institutions in Uganda.
The objectives of the study of the study are: To evaluate the relationship between credit guarantee and performance of financial institutions in Uganda, To examine the relationship between credit monitoring and performance of financial institutions in Uganda and nvestigating the relationship between loan security and performance of financial institutions in Uganda.
The study used a case study design and also adopted majorly quantitative approach for the study. The sample size was determined by the Krejcie and Moegan (1970) table which obtained a sample size of 66 respondents and closed ended questionnaires were used to collect data.
The findings show that there is a relationship between credit risk management and performance of financial institutions in Uganda this allows the management staff to evaluate advertising and promotion strategies.
In conclusion, credit risk management contributes greatly to the performance of financial institutions. Credit guarantee has a positive relationship with Financial Performance. This means that the financial institutions use credit guarantee to protect from the chance of non-payment by a buyer and that credit guarantee usually depends on the assessment of the credit worthiness of clients. Credit monitoring also has a positive relationship with financial performance. This is because credit monitoring tracks clients credit on a daily basis and notifies of any changes on the report and that credit monitoring can help prevent error from credit reports. Further, Loan security has a significant and strong relationship with financial performance since any marketable asset can be used as collateral, Secured loan or credits have an asset of some kind backing for it and that mortgages and car loans are the most common types of loans.
Finally, it is recommended that financial institutions should view the loan portfolio in its segments and as a whole and consider the relationships among portfolio segments as well as among loans. The Bank management should maintain loan approval process in order of effectively determine the ability of the borrower to pay back the loan.