Effects of credit management policies on financial performance of commercial banks in Uganda. A case study of equity bank mukono branch.
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Date
2026-04-15
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Uganda Christian University
Abstract
The study explored the effects of credit management policies on the financial performance of commercial banks in Uganda, focusing specifically on Equity Bank's
Mukono Branch. The objective is to assess how credit management policies has influenced the financial performance of commercial banks (Equity Bank). The objective was supported by three goals and that is examining the effect of credit terms on financial performance, evaluating the impact of credit standards on financial performance and analyzing the influence of collection policies on financial performance.37 respondents from Equity Bank were studied. Simple random sampling technique was used which was ensuring that every member of the population had a chance of being included in the sample. The approach was chosen
because the chosen respondents were either actively engaged with or knowledgeable about the impact of credit management policies on financial performance making them suited to respond to the research questions. This study found out that credit management policies affected the financial performance
of Equity Bank Mukono. Flexible and well structured credit terms enhanced loan repayments and increased profitability. Credit standards positively impacted financial performance by decreasing exposure to bad debts and improving stability. Effective collection policies directly improved the bank profits and liquidity by ensuring timely debt recovery and ineffective policies resulted in higher non-performing loans and weakened financial performance. Inconclusion, the study included that effective credit management policies including well balanced credit terms and robust collection policies were crucial for enhancing the financial performance of commercial banks. Equity Bank Mukono showed that a well managed credit system could increase profitability and improve financial performance. The bank was advised to continue refining its credit management practices to achieve a balance between maximizing profitability and minimizing risk .
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Undergraduate