The role of loan management on performance of financial institutions

Abstract

The research was carried out to find out the role of loan management on performance of financial institutions. Under loan management the researcher looked at loan monotoring and recovery, loan appraisal and approval, then performance of financial institution performance ( improved revenue, loan realization, profitability), intervening factors (organisational policies, government policies). A case study of Pride Microfinance Limited was used because it issues out a lot of loans to clients within Kampala in Uganda and the surrounding regions. This research was carried out at the Headquarters of Pride Microfinance Ltd in Bukoto (Nakawa Division). The aim of the study was to examine the role of loan management on Pride Microfinance Limited. Redesign options in the financial institution to give better services levels to the clients. The research was more of qualitative though the researcher stated that quantitative was used to. The researcher used simple random sampling in administering questionnaires and interviews. Throughout the total work force at Pride Microfinance Ltd, the researcher took a sample size of 39 individuals sampled according to the financial institution’s departments. The researcher used self-administered questionnaires which were given out to respondents with help of research assistants after being pilot run to ensure data quality control. Results from raw data which was collected, presented in form of tables and pie charts was eventually qualitatively interpreted. It is therefore recommended that Pride Microfinance Ltd should motivate its staff and employees other than salary thus should be trained and equipped with more skills and capacities on how to handle loan monitoring and recovery (credit risks), loan approval and appraisal processes so as to be able to gain the best out of it.