Financial Risk and Financial Performance of Commercial Banks in Uganda: A Case Study of Centenary Rural Development Bank.

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Date
2018-07
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Publisher
Kampala International University, College of Economics and Management
Abstract
The purpose of this study was to determine the effect of financial risk on the financial performance of Centenary Rural Development Bank (CRDB). The study was based on the following 4 objectives; (i) to determine the extent to which the credit risk affects the financial performance of CRDB. (ii) to determine the extent to which the market risk affects the financial performance of CRDB. (iii) to determine the effect of liquidity risk on the financial performance of CRDB and (iv) to determine the effect of operational risk on the financial performance of CRDB. The study adopted descriptive survey design and a sample size of 80 from a target population of 100 respondents were selected for the study. In regard to effect of credit risk on financial performance of CRDB; The study found out that credit risk is positively CP=0.421) and statistically and significantly (sig-value=O.OOO) affect financial performance of CRDB, Uganda. In regard to effect of market risk on financial performance of CRDB; The study found out that market risk is positively CP=0.616) and statistically and significantly (sig-value=O.OOO) affect financial performance of CRDB, Uganda. In regard to effect of liquidity risk on financial performance of CRDB; The study found out that liquidity risk is positively CP=0.868) and statistically and significantly (sig-value=O.OOO) affect financial performance of CRDB, Uganda; and in regard to effect of operational risk on financial performance of CRDB; The study found out that financial risk is operational risk is positively CP=0.607) and statistically and significantly (sig-value=O.OOO) affect financial performance of CRDB, Uganda. The study concluded that; credit risk significantly affect financial performance of CRDB, Uganda; market risk significantly affect financial performance of CRDB, Uganda; liquidity risk significantly affect financial performance of CRDB, Uganda; and operational risk significantly affect financial performance of CRDB, Uganda. The study recommended that; in regard to credit risk, management of CRDB should enhance theil" capacity in credit analysis and loan administration. Clear credit policies and lending guidelines should be established. In regard to market risk commercial banks should explore avenues to enhance capacities within banks for managing market risks. In regard to liquidity risk, it is vital for the management of the CRDB to be aware of its liquidity position in different product segment; and in regard to operational risk, CRDB must tailor and permanent improve its risk management process and it is essential to make all employees aware on risk issues.
Description
A Research Proposal Submitted To The College Of Economics and Management In Partial Fulfillment Of The Requirement For The Award Of Bachelor's Degree In Business Administration finance And Accounting Of Kampala International University Kampala, Uganda
Keywords
Financial Risk, Centenary Rural Development Bank
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