Credit risk management and financial performance of commercial banks: a case study of Stanbic Bank
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Date
2026-05-15
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Uganda Christian University
Abstract
The purpose of this research is to investigate how credit risk management affects the financial performance of Stanbic Bank. The following were the Specific Objectives of the study: To investigate the effect of Credit monitoring, Credit Risk assessment and Credit Risk policy on the financial performance of Stanbic bank. A descriptive cross sectional research design was used where both qualitative and quantitative research approaches were employed in data collection. 59 respondents were sampled for the study where data was collected through questionnaires. Quantitative data was analyzed using measures of central tendency while qualitative data was analyzed using correlation and regression analyses. A high positive significant relationship was found between credit monitoring and financial performance. Also, a high positive significant relationship was found between credit risk assessment and financial performance. Lastly, a high positive significant relationship was found between credit policy and financial performance It is found out that credit monitoring, credit assessment and credit policy have strong and statistically significant positive impact on financial performance of the bank. The study concludes that efficient management of credit risks using proper credit risk monitoring, assessment and policies in the institution can result to significant positive effect on the financial performance of the bank and vice versa. It is suggested that in order to attain the required revenue from sales and profit, the financial institutions should adopt the following philosophy: continuously identify the sources of credit risk and classify them to assist in conducting credit risk assessment; continually conduct the analysis of available credit risk information and use responsive credit risk estimation techniques/models in the industry and finally strengthen the credit mitigation and monitoring strategy through proper training and allocations of necessary resources for credit recovery.
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Undergraduate