Information sharing, risk management and financial performance of commercial banks in Uganda

Abstract

The purpose of this study was to investigate the relationship between information, risk management and financial performance of commercial banks. The study was guided by the following research objectives, to examine the relationship between information sharing and risk management, to examine the relationship between information sharing and financial performance, to investigate the relationship between information sharing, risk management and financial performance.

A sample of 104 commercial banks branches was selected from a total of all the branches of commercial banks in Kampala. The respondent was purposively selected from each branch. A cross sectional research design was adopted and primary data was collected using the Questionnaire. Data was analyzed using SPSS package and descriptive, correlation, and regression analysis were carried out.

Findings revealed that there was a significant positive relationship between all the study variables information sharing, risk management, and financial performance. Results from the regression analysis showed that information sharing and risk management significantly predicted 58.6% of financial performance of commercial banks.

The study recommends that banks should build strong information sharing premises like credit bureaus, enrich their risk management committee, credit committee and audit function so as to mitigate risks. Recruitment of qualified staff and training should be a common practice in the banking industry in order to enhance risk management policies and hence improved financial performance.