Abstract:
This study examined the effect of risk management on financial performance of commercial banks. The study was guided by the following objectives notably, to examine the effect of credit risk on financial performance of Stanbic bank, to examine the effect of interest rate risk on financial performance of Stanbic bank and to assess the effect of exchange rate risk on financial performance of Stanbic bank in Uganda. The study used a cross sectional research design, and a quantitative approach. Data was collected from a target population of 35 of employees with accessible unit of 32 of employees in Stanbic bank, using simple random and purposive sampling techniques. Data were collected with the aid of closed ended questionnaire and Statistical Packages for Social Sciences was employed for analyzing data from which frequency tables, descriptive statistics (mean and standard deviation), reliability, validity, correlation, and regression results were obtained. The study findings revealed that there is a positive and a significant effect of credit risk and financial performance of Stanbic bank, interest rate risk and financial performance of Stanbic bank and exchange rate risk and financial performance of Stanbic bank. The study concludes that there is a strong predictive power that the dimensions of risk management contribute towards enhancing financial performance of Stanbic bank in Soroti. Finally, the study, recommends that efforts to improve the financial performance of banks depends on risk management (credit risk, interest rate risk and exchange rate risk).
