Loan management and financial performance of selected savings and credit cooperatives in Kampala district, Uganda
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Date
2014-11
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Kampala International University, College of Economics and Management
Abstract
The study delved into Loan management and financial performance of
the selected Savings and Credit Cooperatives (SACCOs) in Kampala
District, Uganda. Specifically, the study sought: to determine the
extent of loan management in the New Vision and Toyota Uganda's
SACCOs; to determine the level of financial performance; and to
establish if there was a significant relationship between the extent of
loan management and level of financial performance of the New Vision
and Toyota Uganda's SACCOs. Using descriptive correlation and cross
sectional survey designs, a sample of 173 respondents was selected
and studied through a self-administered questionnaire. Frequency
counts and percentage distribution were used to analyze data on the
profile characteristics of the respondents; while means and ranks were
used to determine the extent of loans management and the level of
financial performance of the SACCOs. The study findings revealed as
follows. First, the extent of loan management in both SACCOs is
generally satisfactory (overall mean=2.57). Second, the level of
financial performance was generally high (average mean=2.90). And
third, there is a positive significant relationship between the extent of
loan management practices and financial performance of the two
SACCOs (r=0.619, sig. = 0.000) implying that an improvement in the
loan management practices of a SACCO is likely to increase its financial
performance indicators. On the basis of the foregoing findings, it was
concluded that the extent of loan management and the financial
performance of the two SACCOs are generally satisfactory.
Nevertheless, the loan management practices of these SACCOs
significantly affect their financial performance and financial health.
Besides, proper assessment of the creditworthiness of clients, credit
period, decision to grant loans and securities, and penalties,
significantly enhance the financial health of a SACCO. However,
offering incentives in form of discounts to encourage- early repayment
may worsen the financial performance of SACCOs. For these SACCOs
to improve their financial performance, therefore, the researcher
recommends as follows: the loans officers/managers should make sure
that they give clients a specific date of repayment; the policy on
repayment discounts should be streamlined; the whole practice/policy
on securities and penalties should be improved; there is need to
reduce the number of defaulters; the need to increase investments in
stocks; and to systematize the procedures for deciding to grant loans
and credit period.
Description
A thesis presented to the College of Higher Degrees and Research in partial fulfillment of the requirements for the Award of the Degree of Master of Business Administration Accounting and Finance) of Kampala
International University
Keywords
Loan, Management, Financial