Credit Risk Management and Profitability of Commercial Banks in Uganda: A Case of Centenary Bank Kabale Branch.
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Date
2024
Authors
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Publisher
Kabale University
Abstract
This study focused on establishing the effect of credit risk management on the profitability of Centenary Bank, Kabale Branch. Credit risk management was viewed as a three-dimensional construct consisting of credit risk identification, credit risk assessment, and credit risk control. Profitability on the other hand was viewed in terms of Return on Equity, Return on Assets, and Non-Performing Loans. The study adopted descriptive and correlation research designs. Data was collected from a target population of 103 respondents comprising loan officers, administrators, branch supervisors, accountants, and centenary bank borrowers; using closed-end questionnaires and interview guides. The data was analysed using the Statistical Package of SocialScience from which frequency tables, descriptive statistics, reliability, validity, correlation, and regression results were obtained. At the bivariate level, a Pearson correlation matrix was conducted to ascertain the relationships between the predictor variables and the dependent variable. A linear regression model was used to fit the data. Research findings from the regression model show that risk identification (r=0.882), risk assessment (r=0.776), and risk controls (r=0.829) had a positive significance on the Centenary Bank Kabale Branch’s profitability. The main conclusion drawn from this research was that credit risk identification, credit risk assessment and credit risk controls had a significant effect on the profitability of commercial Banks. The study therefore recommended more emphasis on Credit risk management for fortitudes of increasing profitability of Centenary Bank Kabale.
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Keywords
Credit Risk Management, Profitability, Commercial Banks, Uganda, Centenary Bank Kabale Branch
Citation
Tushemereirwe, Charity (2024). Credit Risk Management and Profitability of Commercial Banks in Uganda: A Case of Centenary Bank Kabale Branch. Kabale: Kabale University.