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The study aims at examining the impact of credit cost on bank financial performance:A case of selected commercial banks in South Sudan.The study is intended to achieve the following objectives;-To examine the effects of credit cost on financial performance of commercial banks,to establish the effects of other factors on financial performance commercial banks and to examine the relationship between credit cost and financial performance of commercial banks.The researcher uses a case study and cross-sectional research design since the study focuses on a particular commercial Banks.The case study used is both descriptive and analytical in nature and the target population of100respondents from commercial banks in South Sudan
The findings showed that commercial banks financial performance is affected by effect of credit cost.In addition the findings showed that the banks sets and follows the credit policies.On centrally findings revealed that the banks do not set credit standard and procedures that are supposed to be followed by both customers and the staff on credit cost and terms making it hard to comply with the policies and terms.The findings shows that financial performance of commercial banks is affected by effects of other factor like average tax rate and liquidity position of the banks,this in line with the findings as seen in the table above which shows that36%respondents agreed that there are effects of other factors on financial performance of commercial banks,This finding is in line with the finding of Fredrick(2010)who postulated the credit policy when it well set and put in place and followed by staffs of the banks helps bank to increase its performance in terms of earning per share and profitability
The researcher recommended that the commercial banks should set its credit policy taking into full account of the implications of credit cost management and this will help the company to improve its financial performance and sustain growth.Commercial banks should set up credit standards that are to be followed by the staffs and the customers.The commercial banks must design credit procedures that helps to provide guidelines in to staffs and customers and respond quickly to customer’s complaint to avoid losing them to competitors and Improve on the quality and offer high quality products at competitive prices for example interest rates being high should be revised to an attractive level.
The findings showed that commercial banks financial performance is affected by effect of credit cost.In addition the findings showed that the banks sets and follows the credit policies.On centrally findings revealed that the banks do not set credit standard and procedures that are supposed to be followed by both customers and the staff on credit cost and terms making it hard to comply with the policies and terms.The findings shows that financial performance of commercial banks is affected by effects of other factor like average tax rate and liquidity position of the banks,this in line with the findings as seen in the table above which shows that36%respondents agreed that there are effects of other factors on financial performance of commercial banks,This finding is in line with the finding of Fredrick(2010)who postulated the credit policy when it well set and put in place and followed by staffs of the banks helps bank to increase its performance in terms of earning per share and profitability
The researcher recommended that the commercial banks should set its credit policy taking into full account of the implications of credit cost management and this will help the company to improve its financial performance and sustain growth.Commercial banks should set up credit standards that are to be followed by the staffs and the customers.The commercial banks must design credit procedures that helps to provide guidelines in to staffs and customers and respond quickly to customer’s complaint to avoid losing them to competitors and Improve on the quality and offer high quality products at competitive prices for example interest rates being high should be revised to an attractive level.