Internal controls and financial performance of commercial banks: a case study of Stanbic Bank Uganda
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Date
2026-04-28
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Uganda Christian University
Abstract
This study aimed at evaluating the influence of internal controls on the financial performance of commercial banks, considering Stanbic Bank Uganda as the case study. The study specifically concentrated on the influence of the control environment, risk assessment, and control activities on financial performance. The study is anchored in Agency Theory, which highlights the importance of having measures that can help coordinate the behavior of the managers towards the goals of the stockholders to improve transparency and profitability. This study utilized the descriptive cross-sectional research design, which integrates the qualitative and quantitative methods of data collection and analysis. The study employed a sample size of 61 respondents using purposive and simple random sampling methods. Primary data were collected through questionnaires, whereas secondary data were collected from various sources such as journals and reports. According to the results, the control environment has a positive significant effect on financial performance. The main contributors to financial performance through the control environment include leadership ethics, organizational structure, and transparency culture. In addition, risk assessment also had a significant positive effect, as proper identification and management of financial risks lead to financial performance improvement. Control activities were determined to be highly effective concerning financial performance due to operational processes, internal audits, fraud prevention, and access controls. In general, the results show that internal controls have a significant role in ensuring financial performance sustainability in commercial banks. According to the results, among all studied factors, control activities had the highest impact on financial performance, followed by risk assessment and the control environment. Therefore, based on the research results, the following recommendations are proposed to improve financial performance in commercial banks: continuous employee training, ethical leadership, risk management, optimized control activities, and internal control system integration. The study further recommends future research on the impact of internal controls on non-financial performance indicators, the role of technology in strengthening internal control systems, and comparative analyses of internal control practices across other commercial banks in Uganda.
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Undergraduate