Abstract: The effective management of credit is a critical component of comprehensive credit management which is essential for long-term success of a banking institution. Poor credit management continues to be a dominant cause of bank failures and banking crisis worldwide. General objective of this study examined the influence of credit management on financial performance of banking institutions in Rwanda, ECOBANK as case study. This research was adopted descriptive research design where descriptive statistics was applied to analyze data from questionnaires and financial report. In line with this, the target population is 21 employees of ECOBANK working in finance, auditors department and Top management. In this study, data were collected through self administered questionnaires and documentation technique. Credit management influencing the financial performance has an overall correlation with ECOBANKS financial performance. 0.746 is significant at 5%. These indicate good fit of the regression equation used. Analysis of Variance shows that f-calculated is greater that f – critical that is 5.221>0.00. This implies that the regression equation was well specified and therefore the co-efficient of the regression shows that there is a strong relationship between two variables. The analysis of variance of the predictors of the model is significance at 0.000. The results indicate that control the volatile of interest rate is the most significant in explaining the financial performance with a significance at 0.000 which is less that a p-value of 0.05 and beta value is 0.836. This therefore means that control the volatile of interest rate would be at 0.824 when business information and technology held at a zero constants. The results had shown that credit management on financial performance of banking institutions in Rwanda. The study recommends that commercial banks in Rwanda should put stringent measure when conducting loan appraisal process and should adhere to all the lending requirements stipulated in order to enhance financial performance.
Keywords: credit management, banking institution, financial performance, ECOBANK.
Title: INFLUENCE OF CREDIT MANAGEMENT ON FINANCIAL PERFORMANCE OF BANKING INSTITUTIONS IN RWANDA: A CASE STUDY OF ECOBANK
Author: POPHIA MUHOZA, Dr. Patrick MULYUNGI, Prof. Mike Iravo, Gerard RURANGWA
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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