The impact of debt management strategies on financial performance of commercial banks in Uganda (Centenary Bank Nakasero):

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Kampala International University, College of Economics and Management.
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.
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.
debt management, commercial banks, financial performance