FINANCIAL RISK MANAGEMENT AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN UGANDA: A CASE STUDY OF CENTENARY BANK, MUKONO BRANCH
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Date
2024-09-30
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Abstract
A case study of Centenary Bank's Mukono branch was used in the study to examine the
connection between financial risk management and the financial performance of
commercial banks in Uganda. With regard to Centenary Bank, Mukono, it specifically
examined the relationship between financial risk identification and financial
performance, established the relationship between financial risk assessment and
financial performance, and evaluated the relationship between financial monitoring
and financial performance.
A cross-sectional survey research design was employed to conduct the study, and both
quantitative and qualitative research methods were applied. Purposive and basic
random sample techniques were employed together with questionnaires and interviews
to gather the data. Despite just 44 responders, the survey also included a sample size
of 48 management and staff members from the Centenary Bank branch in Mukono.
The results showed that the bank's strong operational risk mitigation methods, clear
processes and systems for recognizing possible financial concerns, and encouragement
of employee reporting all greatly enhance financial performance. Furthermore, the
bank's financial performance is positively impacted by its efficient use of cutting-edge
risk assessment tools and models as well as its dedication to routinely reviewing and
updating these procedures. Furthermore, there is a significant association between
improved financial performance and the bank's use of cutting-edge technology to track
market trends, conduct routine internal audits, and thoroughly evaluate financial
statements. These results highlight the significance of proactive risk management
techniques and financial oversight procedures for the long-term viability of Centenary
Bank.
According to the study, Centenary Bank should prioritize compliance and internal
audits, foster a culture of continuous improvement, strengthen its risk identification
and assessment processes through knowledgeable evaluations and regular updates,
improve employee engagement in risk reporting, optimize risk mitigation strategies,
and emphasize long-term financial sustainability by striking a balance between prudent
management and risk-taking for stability and resilience in shifting economic conditions.