| dc.description.abstract | The major objective of this study was to establish the role of credit risk management in
financial performance of financial institutions. The specific objectives were; to establish
relationship between risk mitigation and financial performance of financial institutions, the
impact of risk monitoring impact on financial performance in financial institutions, the effect
of risk diversification on financial performance of financial institutions.
A case study design was used to conduct the study with a sample size of 40 respondents.
Various data collection instruments were used in this study and these include; questionnaires
and interview guide.
The findings revealed that there is a positive and significant correlation between the credit risk
management and financial performance of financial institutions (r = 0.674). That is as the level of
credit risk management increases or decreases, the financial performance of financial institutions
increases and decreases respectively. This means that the change in credit risk management is
strongly correlated with the change in the levels of financial performance of financial institutions.
The results further show that the Sig. (2-tailed) value is 0.01 which indicates that there is
statistically significant correlation between the credit risk management and financial performance
of financial institutions. From the study it revealed that credit risk management strongly
affects the financial performance of financial institutions.
The researcher therefore recommends educating employees on credit risk mitigation, risk
monitoring and risk diversification more often to avoid defaulting clients when loans are not
well monitored by bank which increase losses. The bank should revise their internal controls,
diversify their loan portfolio, and improve the procedures to obtain loans by clearly designing
credit policies, improve communication channels with clients. | en_US |
