Budgetary management practices and financial performance of commercial banks in Uganda; case study: Barclays (ABSA) Bank Uganda Limited

Abstract

The study examined the effect of budgetary management practices on financial performance of commercial banks in Uganda, a case of Barclays (Absa) Bank Uganda Limited under three research objectives; i) to examine the effect of budget planning on financial performance of Barclays (Absa) Bank Uganda limited; ii) to examine the effect of budget implementation on financial performance of Barclays (Absa) Bank Uganda; iii) to examine the effect of budget monitoring and control on financial performance of Barclays (Absa) Bank Uganda. By employing a cross- sectional study with a case study design on a sample of 152 and adopting both qualitative and quantitative research approaches, the study used self-administered questionnaires to collect primary quantitative data while an interview guide enabled collection of qualitative data. Data entry and processing was done using Statistical Package for Social Scientists (SPSS, Version 25) and analyzed using both descriptive and inferential statistics. Achieving a response rate of 82.23%, the findings of Pearson’s two tail statistic revealed that all the examined measures of budgetary management practices (budget planning, budget implementation as well as budget monitoring and control) were positively and significantly associated with financial performance with correlation coefficients of (r = 0.653**; p <0.01, r = 0.695**; p<0.01 and r = 0.490**; p<0.01) respectively. On the other hand, regression analysis revealed that on the overall, budgetary management practices explains 62.6% of the variation in financial performance at Absa and that budget implementation had the highest positive contribution to financial performance indicated by (β = 0.48; p = 0.000) followed by budget planning with (β = 0.281; p = 0.000) and trailed by budget monitoring and control with (β = 0.241; p = 0.000). The researcher concludes that all measures of budgetary management practices are positively and significantly associated with financial performance and that all measures positively predict financial performance although budget implementation proved to have the highest contribution to financial performance at the bank. The study recommends that management should simultaneously employ all the tools of the budgetary management practices since on the overall, budgetary management practices accounts for 62.6% of the variation in financial performance at the bank and the fact that all the tenets of budgetary management practices positively relate with financial performance as well as positively and significantly predicting financial performance.