| dc.description.abstract | The study examined the effect of credit risk management on Loan portfolio quality in
commercial banks in Uganda and examined three research objectives namely; to examine the
effect of risk identification on loan portfolio quality at Centenary bank; to examine the effect of
risk assessment on loan portfolio quality at Centenary Bank and to examine the effect of risk
monitoring and control on loan portfolio quality.
The study adopted a cross – sectional research design which blended both qualitative and
quantitative research approaches on a sample of 201 drawn from a population of 420 employees
who were all employees of Centenary bank in credit risk associated sections/ departments. By
collecting the data through questionnaires and interviews coupled with adaptation of SPSS for
processing, the results were summarized in tables and graphs and in a threefold with univariate
level considering only mean and a standard deviation, bivariate level analysis paying attention to
correlations while multiple regression was performed at multivariate.
With a response rate of 80.6%, the study results revealed that all the examined measures of credit
risk management were positively and significantly correlated with loan portfolio quality. Risk
identification had a correlation value of r = 0.565; p<0.01, risk assessment had a correlation
value of r = 0.225; p<0.01 while risk monitoring and control has a correlation value of r = 0.197;
p<0.05. Similarly, regression analysis revealed that both risk identification and risk assessment
positively affect loan portfolio quality while risk monitoring and control negatively affect loan
portfolio quality with β = 0.803; β = 0.162 and β = -0.360 respectively.
Relatedly, a value of R- Square of 0.419 implies that all the examined measures of credit risk
management explain 41.9% of the variation in loan portfolio quality at Centenary.
The researcher concludes that much all the measures of credit risk management are positively
and significantly associated with loan portfolio quality, risk identification and risk assessment
positively affect loan portfolio quality while risk monitoring and control negatively affects loan
portfolio quality.
The researcher recommends that the management of the bank should optimize risk identification
practices particularly through authenticating the information generated from clients, identifying
the risks associated with repayment ability, collateral, loan tenure and total debt exposure among
others aimed at harnessing loan portfolio quality. With regard to risk monitoring and control,
management of the bank should focus maximum efforts to activities that lead to granting a loan.
This is because a loan usually goes bad at appraisal stage and hence monitoring may hardly
change what is messed up during the preamble to reaching a loan a decision. | en_US |
