Credit Management and Financial Performance of Microfinance Institutions in Uganda: A Case Study of Pride Micro Finance Ltd Kabalagala Branch

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Kampala International University, bachelors degree in business administration
Credit management is one of the most important activities in any company and cannot be overlooked by any economic enterprise engaged in credit irrespective of its business nature. Sound credit management is a prerequisite for a financial institution's stability and continuing profitability, while deteriorating credit quality is the most frequent cause of poor financial performance and condition. As with any financial institution, the biggest risk in pride microfinance is lending money and not getting it back. The study sought to determine the effect of credit management on the financial performance of Microfinance Institutions in Uganda. The study adopted a descriptive survey design. The population of study consisted of 59 MF!s in Uganda that are members of AMF!. A census study was used to carry out the research. Primary data was collected using questionnaires where all the issues on the questionnaire were addressed. Descriptive statistics were used to analyze data. Furthermore, descriptions were made based on the results of the tables. The study found that client appraisal; credit risk control and collection policy had effect on financial performance of PMF!s in Uganda. The study established that there was strong relationship between financial performance of PMFis and client appraisal, credit risk control and collection policy. The study established that client appraisal, credit risk control and collection policy significantly infiuence financial performance of PMFls in Uganda. Collection policy was found to have a higher effect on financial performance and that a stringent policy is more effective in debt recovery than a lenient policy. The study recommends that PMF!s should enhance their collection policy by adapting a more stringent policy to a lenient policy for effective debt recovery.
A Research Report Submitted To College Of Economics and Management Science in Partial Fulfillment of the Requirement for the Award of Bachelors Degree in Business Administration at Kampala International University
Credit Management and Financial Performance, Microfinance Institutions, Pride Micro Finance