TABLE OF CONTENTS
DECLARATION
APPROVAL
DEDICATION
ACKNOWLEDGEMENT
TABLE OF CONTENTS
LIST OF TABLES vfli
LIST OF FIGURES
ABSTRACT
CHAPTER ONE i.
INTRODUCTION 1
1.0 Introduction
1.1 Background to the study 1
1.2 Statement to the problem 3
1.3 Purpose of the study 4
1.4 Research objectives 4
1.4.1 General objective 4
1.4.2 Specific objectives 4
1.5 Research questions 4
1.6 Scope of study 5
1.6.1 Geographical scope s
1.6.2 Content scope s
1.6.3 Time scope 5
1.7 Significance of the study s
1.8 Conceptual framework 6
CHAPTER TWO 8
LITERATURE REVIEW 8
2.0 Introduction 8
2.1 Definition of key terms 8
2.1.1 Credit 8
2.1.2 Risk management 8
2.1.3 Credit risk management g
2.1.3.1 Credit terms .11
2.1.3.2 Credit standards 11
2.1.3.3 Credit policy 12
2.1.3.4 Collection effort/policy 12
2.1.4 Financial performance 12
2.1.4.1 Return on assets 14
2.1.4.2 Return on equity 14
2.2 Empirical literature review 15
2.2.1 Effect of credit terms on financial performance 15
2.2.2 Effect of credit standards on financial performance 15
2.2.3 Effect of credit policy on financial performance 15
2.2.4 Effect of collection effort/policy on financial performance 16
CHAPTER THREE 18
RESEARCH METHODOLOGY 18
3.0 Introduction 18
3.1 Research design 18
3.2 Target population 18
3.3 Sample size 18
3.4 Sampling procedure 18
3.5 Data collection instrument 20
3.6 Pilot test 20
3.6.1 Reliability of the research instrument 20
3.6.2 Validity of the research instrument 20
3.7 Data analysis 21
3.8 Ethical considerations 21
CHAPTER FOUR 22
PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS 22
4.0 Introduction 22
4.1 Bio data of respondents 22
4.2 Descriptive statistics on research variables 25
4.2.1 Descriptive statistics on credit terms 25
4.2.2 Descriptive statistics on credit standards 26
4.2.3 Descriptive statistics on credit policy 28
VI
4.2.4 Descriptive statistics on credit collection policy 30
4.2.5 Descriptive statistics on financial performance of Bushenyi Peoples’ SACCO 32
4.3 Effect of credit terms on financial performance of Bushenyi Peoples’ SACCO .. 33
4.4 Effect of credit standards on financial performance of Bushenyi Peoples’
SACCO 35
4.5 Effect of credit policy on financial performance of Bushenyi Peoples’ SACCO .. 36
4.6 Effect of credit collection policy on financial performance of Bushenyi Peoples’
SACCO 38
CHAPTER FIVE 40
DISCUSSION OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS.40
5.0 Introduction 40
5.1 Discussion of findings 40
5.1.1 Effect of credit terms on financial performance of Bushenyi Peoples’ SACCO
40
5.1.2 Effect of credit standards on financial performance of Bushenyi Peoples’
SACCO 40
5.1.3 Effect of credit policy on financial performance of Bushenyi Peoples’ SACCO
41
5.1.4 Effect of credit collection policy on financial performance of Bushenyi
Peoples’ SACCO 41
5.2 Conclusions of the study 4]
5.3 Recommendations 42
5.4 Areas for future research 42
REFERENCES 43
APPENDICES 45
APPENDIX A 45
SELF ADMINISTERED QUESTIONNAIRE 45
ABSTRACT The purpose of this study was to investigate the effect of credit risk management and financial performance of Bushenyi Peoples’ SACCO in Uganda. The study was based on the following 4 objectives; (i) to assess the effect of credit terms on financial performance of Bushenyi Peoples’ SACCO in Uganda, (ii) to determine the effect of credit standards on financial performance of Bushenyi Peoples’ SACCO in Uganda, (iii) to determine the relationship between credit policy and financial performance of Bushenyi Peoples’ SACCO in Uganda and (iv) to establish the effect of collection policy on financial performance of Bushenyi Peoples’ SACCO in Uganda. The study adopted descriptive survey design and a sample size of 113 respondents were used for this study. The findings revealed that; credit terms is positively (13=0.538) and statistically and significantly (p-value=0.000) affect financial performance of Bushenyi Peoples’ SACCO; credit standards is negatively (13=~0.O01) and does not statistically and significantly (p-value=0.990) affect financial performance of Bushenyi Peoples’ SACCO; credit policy is positively (13=0.773) and statistically and significantly (p-value=O.000) affect financial performance of Bushenyi Peoples’ SACCO and credit collection policy is positively (13=0.307) and statistically and significantly (p-value=0.000) affect financial performance of Bushenyi Peoples’ SACCO. The study concluded that; credit terms have a positive significant effect on financial performance of Bushenyi Peoples’ SACCO; credit standards have a negative significant effect on financial performance of Bushenyi Peoples’ SACCO; credit policy have a positive significant effect on financial performance of Bushenyi Peoples’ SACCO and credit collection policy have a positive significant effect on financial performance of Bushenyi Peoples’ SACCO. The study recommended that; Bushenyi Peoples’ SACCO should normally assess credit history and income of the customer before giving credit to them, always analyse past borrowers; have effective penalties put on default and late repayment; use auctioneers to recover loans and should normally sale of the property to recover loans and Bushenyi Peoples’ SACCO should normally assess market conditions risk of a borrower to limit loan.
