EFFECT OF CREDIT MONITORING PRACTICES ON LOAN PORTFOLIO PERFORMANCE OF COMMERCIAL BANKS IN SOUTH SUDAN: A CASE STUDY OF KENYA COMMERCIAL BANK. MIXED METHODS STUDY.

Abstract

Background:

The study aimed at examining the Effect of credit monitoring practices on the Loan Portfolio performance of commercial banks in South Sudan, a Case of Kenya Commercial Bank.

Methodology:

In this study, a case study research design was adopted; stratified random sampling and purposive sampling techniques were used to select a sample of 92 employees from a population of 120 respondents. Out of 82 questionnaires administered, only 68 respondents returned questionnaires making a response rate of 83% and out of 10 interviewees targeted only 8 interviewees’ responded making a response rate of 80%. The study was both qualitative and quantitative.

Results:

The majority of the respondents (42) were females (55.6%) and 34 of them were males (44.4%) and of them were above 18 years. Findings revealed that credit monitoring positively and significantly affects the perception of loan portfolio performance (r=0.732, P<0.01). The adjusted R square value of 0.501 indicates that credit monitoring practices included in the study explain a 50.1% variation in loan portfolio performance with an F value of 44.68 significant at p-value =0.01.

Conclusion:

All outstanding loans in the loan portfolio are continuously reviewed & closely monitored. Kenya Commercial Bank has ensured that reviews are done on the collection policies to improve credit management.

Recommendation: 

Banks should value all information about the customers at a high level when doing their credit assessment because the information they may consider to be less important could be the cause of a failure in their decisions or, it could be the area from which the customer’s default arises.