Credit Management and Financial Performance of Commercial Banks: A Case of Centenary Bank Mbale Branch
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Date
2024-09-17
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Uganda Christian University
Abstract
The efficient management of credit plays a very important role in the financial performance of commercial banks. This research focused on exploring the impact of credit analysis, credit risk controls, and credit collection policy on the financial performance of Centenary Bank Mbale Branch. The objectives of this study were to assess the effect of credit analysis on the financial performance of the bank, to determine the influence of credit risk controls on financial performance, and to analyze the effects of credit collection policy on financial outcomes. The researcher used descriptive research design that aims to systematically obtain information to describe a population. It helps answer the what, when, where and how questions regarding the research problem rather than the why, data was collected from Centenary Bank Mbale Branch, utilizing both qualitative and quantitative research methods.
Findings from the study revealed that credit collection policy is the greatest contributor to financial performance with a beta value (β) = 0.702; Sig = 0.000, Credit analysis is second contributor to financial performance with beta value (β) = 0.364; Sig = 0.018 and Credit analysis is the least contributor to financial performance with a beta value (β) = 0.110; Sig = 0.030
The study concludes that credit analysis and financial performance are significantly corrected and that
having proper credit risk control plays a significant role in ensuring improved financial performance of the bank while Credit collection policy significantly affects financial performance of the bank and this implies that putting more emphasis in further strengthening the policy will help enhance financial performance of the bank.
It was recommended, the bank should put more emphasis on ensuring that credit analysis is thoroughly carried out so as to ascertain the capacity of a client to repay their credit. The bank should put more emphasis on ensuring that risks are controlled as this shall reduce exposure to making losses. The management of the bank should from time to time review the existing credit collection policy as this shall help close any gaps in credit collection and hence boost the bank’s financial position
Description
Postgraduate research