RELATIONSHIP BETWEEN CREDIT RISK MANAGEMENT AND LOAN PORTFOLIO IN COMMERCIAL BANKS OF RWANDA; A CASE OF URWEGO OPPORTUNITY BANK (2012-2016)

Pascasie Ndikumana, Dr. Sazir Nsubuga Mayanja and Dr. Gedion Alang’o Omwono
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Pascasie Ndikumana: MBA Finance and Accounting student at the university of Kigali Rwanda
Dr. Sazir Nsubuga Mayanja: Senior lecturers Department of Business, Management and Economics, University of Kigali, Rwanda
Dr. Gedion Alang’o Omwono: Senior lecturers Department of Business, Management and Economics, University of Kigali, Rwanda

Noble International Journal of Social Sciences Research, 2019, vol. 4, issue 6, 86-104

Abstract: This study focuses on relationship between credit risk management and loan portfolio in commercial banks of Rwanda; a case of Urwego Opportunity Bank in the years of 2012-2016. This study was guided with the following research objectives: to examine the influence of credit risk management on loan portfolio; to analyze the management of loan portfolio and to determine the relationship between credit risk management and loan portfolio in UOB from 2012 to 2016. In this study, purposive and stratified sampling technique were used in selecting  15 respondents out of  77 target population staff of credit department of UOB. Under this, a triangulation was adopted where weakness of the other tools was addressed by the other data tools. Data analysis was done by using Descriptive statistical tools (SPSS) version 21. This study found that the lending policies are highly implemented with mean of 3.13; 3.08 shown that lending decision is well made. And 2.64 indicated that the recovery techniques are effectively applied; the overall mean of 3.03 shown that loan risk monitoring is performed. Above all effort has been made to achieve better credit risk management in UOB and it has shown a positive relationship with loan portfolio management although the ratio of NPL has not decreased. This is because in 2016, the UOB has granted loan in corn farming in Kirehe, Kayonza and Bugesera districts and unfortunately climate change due to excess of draught, from August 2016, has led to crop failure Prompting the borrowers not to pay. This study recommended that financial institutions specifically Urwego Opportunity Bank, should add agriculture insurance in loan requirements to minimize agriculture loan risks.

Keywords: Credit; Risk; Management; and; Loan; Portfolio; in; Commercial; Banks; of; Rwanda (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:nap:nijssr:2019:p:86-104

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