Abstract: Globally many firms aim at achieving and sustaining competitive advantage, leading to high performance. However, they face challenge on how to achieve and sustain this performance, especially in a rapidly changing environment. Empirical studies indicate that this can be achieved if the firms understand effects of their competitive advantage. Banking sector in Rwanda faces such challenges, and though the sector has generally been performing well, there is difference in performance among the banks, with some banks reporting poor performance so far as profit before tax is concerned. This main purpose of the study was to determine the effects of competitive advantage on financial performance of local commercial banks in Rwanda. Specifically, the effects of competitive advantage studied were bank activities, bank activity drivers, initial conditions and managerial choice. This study adopted a descriptive research design in soliciting information on effects of liquidity management on financial performance of commercial banks. The target population was 189 employees of BPR. The sampling technique employed was simple random sampling and the sample size was 129 respondents. Primary quantitative data was collected by use of self-administered structured questionnaires. The researcher also used secondary data derived from the audited financial statement of the BPR. The data collected was analyzed, with respect to the study objectives, using both descriptive and inferential statistics. The data was analyzed using descriptive statistics such as mode, median, mean, standard deviation. Multiple regression analysis was employed to determine relationship between liquidity management and financial performance of commercial banks in Rwanda. Data was presented in tables, charts, figures and mathematical expressions. The study established the relationship between performance and bank activities, performance and bank activity drivers, as well as performance and managerial choices, to be positive and statistically significant. However, the study found that initial conditions do not have a significant relationship with performance of commercial banks in Rwanda. The study recommends that the banking management lobby for the training of all bank staff on the role and application of the various categories of dynamic capabilities as well as on market volatility and the correct measures to be taken within their banks. The study also recommends that all staff be trained on customer service delivery and customer relationship. Management should also ensure robust training programs involving all their employees so as to uplift their intellectual capital.
Keywords: Bank activity drivers, Financial performance, commercial banks in Rwanda.
Title: EFFECTS OF COMPETITIVE ADVANTAGE ON PERFORMANCE OF LOCAL COMMERCIAL BANKS IN RWANDA: A CASE STUDY OF BANQUE POPULAIRE DU RWANDA Ltd
Author: DEBORAH INGABIRE RIBAKARE, Dr. PATRICK MULYUNGI, Prof. IROVA MIKE
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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