The effects of credit policy on the performance of commercial Banks: a case study of Equity Bank, Kisumu Branch, Kenya.
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Date
2008-09
Authors
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Publisher
Kampala International University, College of Economics and Management
Abstract
The study was aimed at assessing the effects of credit policy on the performance of
commercial banks in Equity bank of Kenya taking case study to be Kisumu branch. The
study was mainly to look at credit risk policy and the performance of the Equity bank and if
this had been effective to the bank.
For the effectiveness of the research, the researcher used research design, data collection
and analysis was used to arrange the information in such a way that enabled the researcher
to come up with the reliable recommendations and conclusions. Different methodologies
were employed which were research design, study population, sampling design, research
instruments and analysis of data where the researcher used pie charts, and presentation was
done in bar graphs.
It was realised that the performance of any commercial bank depends on its existing credit
policy at any given time period thus Equity bank use credit policy to evaluate the credit
worthiness of its customers hence this has enable the bank to run smoothly and effectively.
It was also found out that Equity bank uses credit rating policy which helps them to rate the
credit worthiness of its customers. Credit rating also helps the bank to reduce the defaulters
and the Equity bank keep and check the financial records of their clients.
It was also revealed that the bank uses credit evaluation where this looks at the in depth
analysis in a client application. It is the duration it takes a client to access the funds from
the time an application on credit facility is tendered in from to the time the bank disburse
the loan. It is true that the majority of the clients takes a month for their loans to be
approved from Equity bank thus is seen when a customer has meet all the requirements
needed by the bank.
Despite the good performance of Equity bank due to its credit policies, the bank had
however faced some challenges' which had hindered their operations hence this has caused
bad debts in the bank. These are improper appraisal, conmen, poor supervision, political
influence, weak legal system, diversion of funds, non- compliance and poor payment.
Description
A research dissertation submitted to the School Of Business and Management in partial fulfillment for the Award of Bachelor’s Degree in Business Administration at Kampala International University
Keywords
Policy, Credit, Performance, Banks, Commercial