1 Credit Policy and Performance of Commercial Banks in Uganda Case Study: Centenary Bank Main Branch

Abstract

The purpose of the study was to investigate the relationship between credit policy and performance of commercial banks. Credit policy was conceptualized by credit terms, client appraisal and credit risk management and performance of commercial banks (dependent variable) was measured using profitability, liquidity and market share. The research had three main objectives: to examine the relationship between credit terms and performance of commercial banks in Uganda, to assess the relationship between client appraisal and performance of commercial banks in Uganda, and to examine the relationship between credit risk management and performance of commercial banks in Uganda.

A case study design was used during the study. The researcher also used a structured questionnaire which was both qualitative and quantitative to represent the research problem. The questionnaires were distributed to the randomly and conveniently sampled respondents.

The objectives of the study were analyzed, the findings and results presented. It was found that credit policy (credit terms, client appraisal and credit risk management) has a positive and significant relationship with performance of commercial banks in Centenary Bank. Therefore, credit policies should be formulated by management of Centenary bank to improve on the performance of the bank and eventually its growth.

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