Browsing by Author "Mubiru, Edward Vernon"

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    Credit Appraisal, Credit Risk Management Process and Loan Portfolio Performance of Microfinance Institutions in Uganda during the COVID-19 Pandemic.
    (2024) Mubiru, Edward Vernon
    This research study investigates the influence of credit appraisal and credit risk management on loan portfolio performance within a financial institution context. The study is underpinned by the Portfolio theory by Harry Markowitz (1952). The study employs regression analysis and mediation testing to analyze primary data collected. Data was collected from 251 respondents, resulting in a 92% response rate. Validity and reliability was ensured using the Cronbach alpha coefficient and professional validation of the data collection instrument before data collection. The study's findings indicate a significant relationship between credit appraisal and loan portfolio performance, with a positive association (r = 0.236; p ≤ 0.01). Effective credit appraisal was shown to contribute to better loan portfolio performance. Similarly, credit risk management was found to have a positive and significant association with loan portfolio performance (r = 0.289; p ≤ 0.01), indicating that effective risk management can improve loan portfolio performance. Regression analysis revealed that credit appraisal has a significant positive influence on loan portfolio performance (Beta = 0.236), suggesting that when credit appraisal is carried out effectively, loan portfolio performance tends to improve. Credit risk management also significantly influences loan portfolio performance (Beta = 0.251), indicating that effective risk management can contribute to better loan portfolio performance. The combined model of credit appraisal and credit risk management accounted for 26.7% of the variance in loan portfolio performance. However, other unexplored factors may also influence loan portfolio performance. The model was statistically significant (Model Significance = 0.000), indicating the reliability of the results for decision-making in improving loan portfolio performance. Mediation analysis using Sobel's Statistic revealed that credit risk management partially mediates the relationship between credit appraisal and loan portfolio performance, further emphasizing its significance in the context of loan portfolio management. Credit risk management may not only mediate but also independently influence loan portfolio performance. In summary, this research underscores the importance of effective credit appraisal and credit risk management in enhancing loan portfolio performance in financial institutions, highlighting the need for a comprehensive approach to credit risk management to optimize loan portfolio performance.