The Impact Of Debt Management On Financial Performance Of Commercial Banks In Uganda. A Case Of Centenary Bank Uganda Kabalagala Branch

ABSTRACT

The study was set to establish the impact of debt management on financial performance of

commercial banks in Uganda. A case of centenary bank, Uganda Kabalagala branch. It was

guided by the following objectives; to find out the different debt management strategies used by

commercial banks, to examine the financial performance levels of commercial banks, and lastly

to assess the relationship between debt management and financial performance in commercial

banks. The study adopted a descriptive research design. The design is deemed appropriate

because the main interest of the researcher is to explore the viable relationship and describing

how the factors support the two variables that are under investigation. The researcher will collect

data using administering questionnaires and interviews to obtain up-to- date and first hand

information. The study uses a study population of 71 members representing beneficiaries from

Centenary bank, staff members of Centenary Bank in Kampala. From this population a sample

size of 60 respondents was got using sloven's formula. The study made the following findings

The research on debt management and financial performance of commercial banks in Uganda

was conducted in Centenary's bank Kampala branch. On examining the techniques of debt

management employed by Centenary bank, the findings revealed that; determination of payment

period, debt consolidation, debt cycling, security and safety of the advance, efficiency of

management and liquidity level were the responses given by the respondents. The findings

conclude that there is a high degree of financial performance levels of commercial banks and if

this is maintained, it will constitute to the satisfaction of the financial performance of the

commercial banks. According to the findings, the factors affecting debt management were

regressed on factors under financial performance of commercial banks. The findings revealed

that factors studied under debt management explain 74.7% of the factors leading to financial

performance of commercial banks. The correlation coefficient 0.864 is strong and showed that

debt management has a significant strong relationship on financial management in commercial

banks. The study made the following conclusions According to the analysis made Centenary's

bank ensures that the credit and debt collection staff work as a team, excellent liaison and

communication skills especially when identifying business risks and how to minimize bad

debts. Centenary debt terms are effective since are set jointly by board members, Heads of departments and managing director. The study confirmed a strong positive relationship between debt management and financial performance in Centenary bank. The existence of an effective debt policy, the higher the financial performance levels. The study made the following recommendations The procedures in the previous chapter have laid a firm foundation upon which recommendations can be drawn from the study in light of the study objectives. Management of Centenary bank should ensure that the credit and debt management/collection staff work as a team, excellent liaison and communication skills especially when identifying business risks and how to minimize bad debts and provision for doubtful debts as well.