Corporate strategies and financial performance among foreign commercial banks in Bujumbura, Burundi
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Date
2020-03
Authors
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Journal ISSN
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Publisher
Kampala International University, College of Economics and Management
Abstract
There has been a drop in the financial performance of foreign commercial banks in Burundi.
This has been attributed to the high level of competition, political interference, high level of
poverty and low level of penetration to the rural ‘unbanked’, failure to recover loans/increasing
non-performing loans, and decrease in return on assets. This study therefore investigated the
relationship between corporate strategies and financial performance among foreign commercial
banks in Burundi. The following objectives guided the study: to examine the effect of competitive
strategy on the financial performance of foreign commercial banks in Bujumbura; to determine
the effect operational strategy on the financial performance of foreign commercial banks in
Bujumbura; and to establish the effect of resource governance on the financial performance of
foreign commercial banks in Bujumbura.
The study used cross-sectional descriptive research design using a quantitative approach. The
target population was 219 employees who included technical staff. A sample size of 142
respondents was determined and the simple random sampling was used to select the respondents.
Questionnaire was used as the data collection instrument and data was analyzed using
frequency, percentage tables, mean, standard deviations, and linear regression analysis.
The study revealed that competitive strategy significantly affects financial performance of
foreign commercial banks in Bujumbura (R2=0.153, p=0.000). Similarly, the study revealed that
operational strategy significantly affects the financial performance of foreign commercial banks
in Bujumbura (R2=0.234, p=0.000). Lastly, the study revealed that resource governance
significantly affects financial performance of foreign commercial banks in Bujumbura
(R2=0.286, p=0.000).
The study concluded that corporate strategies significantly affect financial performance. The
study made the following recommendations: the management of foreign commercial banks
should employ advanced and constant methods of market research so as to be on ‘the know’ of
market threats, and opportunities; the management of foreign commercial banks should develop
new processes of delivering their services to their customers; and the foreign commercial banks
should continue improving the competence and skills of their employees through in-service
training, conferences, meetings, and seminars. The study adds to the body of knowledge that in
the banking industry of Burundi, the use of competitive strategies, operational strategies, and
resource governance has significant effects on financial performance.
Description
A thesis submitted to the college of economics and management in partial fulfillment for the Requirements for the award of the Degree of Master’s in International Business of Kampala International University.
Keywords
Corporate strategies, Financial performance, Foreign Commercial banks, Burundi