Credit management policies and loan portfolio performance in credit institutions in Uganda:

Abstract

The study was conducted to examine the effect of credit management policies on loan portfolio Performance of credit institutions particularly BRAC Uganda Pallisa Branch and it was based on three specific objectives; to examine the effect of credit policies on loan portfolio performance, to establish the effect of credit standards on the loan portfolio performance and to assess the effect of collection procedures on the loan portfolio performance. The study adopted cross-sectional research design, and quantitative approach to test the causal relationship and predictive power of the independent variable on dependent variable. Data was collected from a target population of 55 employees with accessible unit of inquiry being 48 employees of BRAC Uganda Pallia Branch, using simple random and purposive sampling techniques. Data was collected using a close ended questionnaire which was late entered in SPSS version 20 and analyzed using descriptive statistics that is frequencies and correlation and Regression results were obtained. The findings revealed that; credit policies positively and significantly affect loan portfolio performance; credit standards positively and significantly affect loan portfolio performance; and collection procedures positively and significantly affects loan portfolio performance. The researcher conclusion that credit management policies are substantial in credit institutions in Uganda since they enable in over viewing, supervising the loaning process so that the risk associated with loaning funds to borrowers which as well as reducing financial risk for bank and other businesses. Therefore, credit institutions in Uganda could be strongly advised to always adhere to government credit management policies and others that govern banking sector to enhance loan portfolio performance.