Abstract: The study assessed the working capital management used and its effect on performance of financial institutions in Rwanda. In this research the I & M bank Ltd main branch in Kigali city was used as a case study to determine the relationship between the working practice and financial performance in institution from 2009 to 2013. The specific objectives of the research included the following; to identify the management practices used for managing working capital in banking institutions in Rwanda, to determine the factors that affect working capital of banking intuitions in Rwanda and to determine the relationship between the working capital management practices and the performance of banking institutions in Rwanda. A descriptive approach which involved measurement, classification, analysis, comparison and interpretation of the data was used in this study. A sample of 15 heads of department of I & M bank Ltd main branch in Kigali city were purposively sampled out of the top management population of 15 based on Robert and Morgan (1970) table. Both qualitative and quantitative research design were used in order to provide better opportunities to answer the research questions and to evaluate the extent to which the findings may be trusted, and inferences made from the data collected. Secondary data was obtained from financial documents of the bank while primary data was collected on perception and attitude of the respondent on working capital management and performance of financial institutions in Rwanda. The numerical variables that needed accounting and interpretation were collated for data analysis. Data analysis was done using descriptive and inferential statistics and the result presented using tables and figures of percentages, frequencies and correlations based on the objectives. The age gender, education and experience of the respondents were found to be accurate and reliable to constitute a strong bases on which conclusions should be based. The factors for performance and the measures of working capital management were identified to visualize the impact on financial performance. The main findings in the research indicated that the bank employs the conservative practices in working capital management characterized by high cash and current assets with relatively low levels of non-performing loans and profits. The respondents also ranked accounts receivable as the most important component of working capital (53.4%) followed by cash at hand (40%) and inventory (6.6%) respectively. The secondary data showed that the working capital management and financial performance in I & M bank Ltd are related as was further confirmed by 93% of contacted respondents who also revealed that the main factor which affected the working capital was the nature of business. The research findings are important in enhancing the performance of financial institutions through their ability to maintain sound working capital management strategies. The strategies are known to enhance proper financial planning and control that enable the banks to maintain enough working capital with constant financial reporting channels and procedures.
Keywords: working capital management, accounts receivable, cash at hand, inventory financial performance, I & M bank Ltd.
Title: WORKING CAPITAL MANAGEMENT PRACTICES AND FINANCIAL PERFORMANCE IN FINANCIAL INSTITUTIONS IN RWANDA: A CASE STUDY OF I&M BANK LTD, KIGALI CITY MAIN BRANCH (2009-2013)
Author: RWIGEMA PIERRE CELESTIN, Dr. MARGARET OCHILLO, Dr. Hesbon O. Andala
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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