Credit Risk Management and Financial Performance of Saccos in Bush Enyi, Uganda: A Case Study of Bush Enyi Peoples’ Sacco~

TABLE OF CONTENTS

DECLARATION

APPROVAL

DEDICATION

ACKNOWLEDGEMENT

TABLE OF CONTENTS

LIST OF TABLES vfli

LIST OF FIGURES

ABSTRACT

CHAPTER ONE i.

INTRODUCTION 1

1.0 Introduction

1.1 Background to the study 1

1.2 Statement to the problem 3

1.3 Purpose of the study 4

1.4 Research objectives 4

1.4.1 General objective 4

1.4.2 Specific objectives 4

1.5 Research questions 4

1.6 Scope of study 5

1.6.1 Geographical scope s

1.6.2 Content scope s

1.6.3 Time scope 5

1.7 Significance of the study s

1.8 Conceptual framework 6

CHAPTER TWO 8

LITERATURE REVIEW 8

2.0 Introduction 8

2.1 Definition of key terms 8

2.1.1 Credit 8

2.1.2 Risk management 8

2.1.3 Credit risk management g

2.1.3.1 Credit terms .11

2.1.3.2 Credit standards 11

2.1.3.3 Credit policy 12

2.1.3.4 Collection effort/policy 12

2.1.4 Financial performance 12

2.1.4.1 Return on assets 14

2.1.4.2 Return on equity 14

2.2 Empirical literature review 15

2.2.1 Effect of credit terms on financial performance 15

2.2.2 Effect of credit standards on financial performance 15

2.2.3 Effect of credit policy on financial performance 15

2.2.4 Effect of collection effort/policy on financial performance 16

CHAPTER THREE 18

RESEARCH METHODOLOGY 18

3.0 Introduction 18

3.1 Research design 18

3.2 Target population 18

3.3 Sample size 18

3.4 Sampling procedure 18

3.5 Data collection instrument 20

3.6 Pilot test 20

3.6.1 Reliability of the research instrument 20

3.6.2 Validity of the research instrument 20

3.7 Data analysis 21

3.8 Ethical considerations 21

CHAPTER FOUR 22

PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS 22

4.0 Introduction 22

4.1 Bio data of respondents 22

4.2 Descriptive statistics on research variables 25

4.2.1 Descriptive statistics on credit terms 25

4.2.2 Descriptive statistics on credit standards 26

4.2.3 Descriptive statistics on credit policy 28

VI

4.2.4 Descriptive statistics on credit collection policy 30

4.2.5 Descriptive statistics on financial performance of Bushenyi Peoples’ SACCO 32

4.3 Effect of credit terms on financial performance of Bushenyi Peoples’ SACCO .. 33

4.4 Effect of credit standards on financial performance of Bushenyi Peoples’

SACCO 35

4.5 Effect of credit policy on financial performance of Bushenyi Peoples’ SACCO .. 36

4.6 Effect of credit collection policy on financial performance of Bushenyi Peoples’

SACCO 38

CHAPTER FIVE 40

DISCUSSION OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS.40

5.0 Introduction 40

5.1 Discussion of findings 40

5.1.1 Effect of credit terms on financial performance of Bushenyi Peoples’ SACCO

40

5.1.2 Effect of credit standards on financial performance of Bushenyi Peoples’

SACCO 40

5.1.3 Effect of credit policy on financial performance of Bushenyi Peoples’ SACCO

41

5.1.4 Effect of credit collection policy on financial performance of Bushenyi

Peoples’ SACCO 41

5.2 Conclusions of the study 4]

5.3 Recommendations 42

5.4 Areas for future research 42

REFERENCES 43

APPENDICES 45

APPENDIX A 45

SELF ADMINISTERED QUESTIONNAIRE 45