The Impact Of Credit Management On The Performance Of Small Medium Seized Enterprises: A Case Study Of Finca Uganda, Gulu Branch

TABLE OF CONTENTS

DECLARATION .......................................................................................................... i

APPROVAL ................................................................................................................ ii

DEDICATION ........................................................................................................... iii

ACKNOWLEDGEMENTS ............................................................................................. iv

CHAPTER ONE ......................................................................................................... 1

1.0 Background to the Study ................................................................................ 1

1.1 Statement of the Problem ........................................................................... 3

1.2 Purpose of the Study ........................................................................................ 3

1.3 Objectives of the Study ................................................................................... 3

1.4 Research Questions ......................................................................................... 3

1.5 Significance of the Study ................................................................................. 4

1.6 Scope of the Study ....................................................................................... 4

1.7 Conceptual Framework .................................................................................... 4

1.8 Organization of the Report .............................................................................. 6

:HAPTER TWO ........................................................................................................ 8

1.0 Literature Review ............................................................................................ 8

(.1 Credit Risk Management.. ................................................................................ 8

'..2 Appraisal (Avoidance) ..................................................................................... 11

'.. 3 Credit Rating ................................................................................................. 12

.4 Technical Feasibility ....................................................................................... 17

.5 Financial Viability and Financial Analysis .............................................................. 18

.6 Risk Transfer ................................................................................................. 20

.7 Risk Diversification ......................................................................................... 27

,8 Risk Retention ........................................................................................... 27

9 Loan Performance ........................................................................................... 29

10 Relationship between Loan Appraisal and Loan Performance ............................ 30

V

2.11 Relationship between other Risk Management Techniques and Loan

Performance ........................................................................................................... 31

CHAPTER THREE RESEARCH METHODOLOGY .......................................................... 34

3.0 INTRODUCTION ................................................................................................ 34

3.1 Research design ................................................................................................ 34

3.2 Research population .......................................................................................... 34

3.3 Sampling procedure ........................................................................................... 34

3.3.2 Stratified sampling .......................................................................................... 34

3.4 Sample size ....................................................................................................... 34

3.5.0 INSTRUMENTS ............................................................................................... 35

3.5.2 Questionnaire ................................................................................................. 35

3.5.3 Interviews ...................................................................................................... 35

3.5.4 Documentary Review ...................................................................................... 36

3.6 Data processing and analysis ............................................................................. 36

3.7 Limitations of the study ..................................................................................... 36

CHAPTER FOUR ............................................................................................... 37

4.0 DATA PRESENTATION, ANALYSIS AND INTERPRETATION ................................ 37

4.1 Introduction .................................................................................................. 37

4.2 Demographic Data ......................................................................................... 37

4.2.3 Qualification of Respondents ........................................................................... 38

4.2.4 Working Experience in the Bank ........................................ : ............................. 39

4.2.5 Status of Respondents by Age ......................................................................... 40

4.2.6 Working Experience in the Banking Sector ...................................................... .41

4.3 Factor Analysis ................................................................................................ 41

4.4.1 Relationship between Loan Appraisal and Loan Performance ........................ .45

:::HAPTER FIVE ................................................................................................ 47

5.0 INTERPRETATION, DISCUSSION, CONCLUSION AND RECOMMENDATION ........ 47

5.1 Introduction .................................................................................................. 47

VI

5.2 Interpretation and Discussion of Results .......................................................... 47

5.2.1 Examining the Relationship between Loan Appraisal and Loan Performance .

.............................................................................................................................. 47

5.2.2 Examining the Relationship between Financial Viability, Financial Analysis and

Loan Performance ................................................................................................... 48

5.2.3 Examining the Relationship between Technical Feasibility and Loan

Performance ......... .49

5.3 Examining the Relationship between other Risk Management Techniques and

Loan Performance .................................................................................................... ..

.................................................................................................................... 50

5.4 Conclusions ................................................................................................... 52

5.5. Recommendations ......................................................................................... 53

5.6 Areas for Further Research ............................................................................. 55

References ............................................................................................................. 56

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