Risk Management and Financial Performance of Commercial Banks: A Case of Centenary Bank Kabale Branch, Uganda

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Date
2022
Journal Title
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Volume Title
Publisher
Kabale University
Abstract
The purpose of this study was to assess the effect of financial risks on financial performance of commercial banks in Uganda taking a case study of Centenary bank Kabale branch. The specific objectives of this study included: to establish the effect of credit risk on financial performance of commercial banks in Uganda; to determine the effect of liquidity risk on financial performance of commercial banks in Uganda; and, to assess the effect of operational risk on financial performance of commercial banks in Uganda. Descriptive research design was adopted in this research. Both primary and secondary data were used in this study. Data was collected from 78 staff of Centenary Bank using structured questionnaire. The staff were sampled from a population of 97 staff. Both correlation and regression analyses were used to measure the effect of credit risk, liquidity risk and operational risk on financial performance of commercial banks. The findings of this study indicated a significant association between credit risk management and financial performance of the bank. The findings also showed a significant relationship between liquidity risk and financial performance of the bank. From the findings of this study, it can be concluded that credit risk and liquidity risk could impact negatively on the financial performance and therefore, since proper management of these risks enhances financial performance, the commercial banks should put up strong structures to control these risks. This will in turn improve the financial performance of the banks. Therefore, there is need to set up strong structures for management of credit risk in order to enhance financial performance. The bank management should also give utmost priority to address the liquidity problems of the bank. This is because liquidity risk management positively influences financial performance. Therefore, the issues relating to liquidity should be promptly addressed, and immediate remedial measures taken to avoid the consequences of the bank becoming illiquid.
Description
A Research Dissertation Submitted to the Faculty of Economics and Management Science in Partial Fulfilment of the Requirements for the Award of the Master’s Degree in Business Administration of Kabale University
Keywords
Risk Management , Financial Performance ,Commercial Banks
Citation