The impact of debt management strategies on financial performance of commercial banks in Uganda (Centenary Bank Nakasero):
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Date
2019-09
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Publisher
Kampala International University, College of Economics and Management.
Abstract
Commercial banks are in the business of safeguarding money and other valuables for their
Members besides providing loans and offering investment financial services. Credit creation is
the main income generating activity for the commercial banks. But this activity involves huge
risks to both the lender and the borrower. The risk of a member not fulfilling his or her
obligation as per the contract on due date or anytime thereafter can greatly jeopardize the smooth
functioning of commercial banks business. The purpose of the study was to investigate the effect
of debt management on the financial performance of commercial banks. The study was based on
three specific objectives; to find out the different debt management strategies used by
commercial banks, to examine the financial performance levels of commercial banks and to
assess the relationship between debt management and financial performance in commercial
banks. It was based on a descriptive survey design basing on the use of qualitative and
quantitative approaches that was adopted to establish the effect of credit management on
Financial Performance of commercial banks in Centenary Bank Nakasero, Kampala district.
A random sampling system used in the study. Questionnaires, observation and response rate
were used to collect primary and secondary sources of data from 50 out of 60 respondents, using
simple random sampling. Data analysis was done using SPSS’s frequencies. Finally the report
looked at the study results and gave the discussion of each finding. Therefore, here, data
analysis, procedures and response rate are focused on. Then the findings conclusions and
recommendations are presented. According to objective one, provided average of different debt
management strategies used by commercial banks have a positive effect that the strategies
formulated debt management strategies being used by commercial banks in Centenary bank,
Nakasero, Kampala District helped in the growth of commercial banks in which affect the credit
management of financial institutions staff had the findings over 58% levels of agreement on the
areas provided / studied or selected, According objective two, the importance of financial
performance of commercial banks indicate that the financial performance has helped in the
valuing the effectiveness of commercial banks and have greatly increased overtime by response
of 68% and financial performance is helpful in the growth of commercial banks and has greatly
increased overtime by 59%.According to objective three, the study findings revealed that the
relationship between debt management and financial performance in commercial banks are
responsible for the increase in the profitability of commercial banks has generated had a positive
effect on the financial management in Centenary bank, Nakasero, Kampala District with 66% of
respondents who strongly agreed and 24% agreed. Though majority of the respondents did not
comply with what was being analyzed according to the data in the table above. The structures
that would ensure that the laid down credit risk policies are strictly adhered to, is lacking in
majority of financial institutions. We obtained the findings and analyzed the data by use of tables
and charts which helped to present data and arrive at conclusion and recommendations.
Conclusion, enormous efforts have tried to improve on the nature of loan assessment/debt
management policies and to prevent bad debts from accumulating by ensuring that they establish
strict internal guidelines which ensure that the loan is based on a sound credit analysis and also
to establish a long term customer relationship between the bank and its customers.
Recommendation, this would help to minimize loan losses and ensure that the profitability of
these financial institutions and their members is safeguarded.
Description
a research report submitted to the college of economics and management in partial fulfillment of the requirements for the award of a bachelor’s degree in business administration of Kampala international university.
Keywords
debt management, commercial banks, financial performance