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The Effects of Risk Management System on Financial Performance of Commercial Banks in Rwanda: A Case of Cogebanque Ltd

Author

Listed:
  • Hitimana, Mireille

    (Department of Business Administration, Jomo Kenyatta University of Agriculture and Technology, Kigali, RWANDA)

  • Kule, Julius Warren

    (Head of Department, Department of Management and Social Sciences, Jomo Kenyatta University of Agriculture and Technology, Kigali, RWANDA)

  • Mbabazize, Peter Mbabazi

    (Lecturer, Department of Business Administration, Jomo Kenyatta University of Agriculture and Technology, Kigali, RWANDA)

Abstract

This research study, entitled an Assessment of the Effect of Risk Management System on Financial Performance of Commercial Banks in Rwanda, aimed to assess risk factors in the performance of commercial banks like credit risk, embezzlement, theft, and others. Three specific objectives were formulated, namely; to analyze the effect of the directive control system on the Financial Performance of Cogebanque Ltd; to establish the impact of the preventive control system on the Financial Performance of Cogebanque Ltd; to examine the effect of the detective control system on the Financial Performance of Cogebanque Ltd. The study examined the risk management system and financial performances in Cogebanque Ltd, located in Kigali City, for four years, from 2011-2014. The study used a descriptive design. A sample size of 40 staff of Cogebanque Ltd participated in the study. SPSS software (version 22) was used to process the data, and analyses were made using frequency/percentages, mean and standard deviation. The relationship between the variables was established using Pearson's correlation. The study found that different risk management systems consist of directive control, preventive, and detective control systems. The study revealed that the risk management system had improved Cogebanque bank’s return on investment, profitability, liquidity, return on asset and return on equity and loan returns by 72.7%.

Suggested Citation

  • Hitimana, Mireille & Kule, Julius Warren & Mbabazize, Peter Mbabazi, 2016. "The Effects of Risk Management System on Financial Performance of Commercial Banks in Rwanda: A Case of Cogebanque Ltd," American Journal of Trade and Policy, Asian Business Consortium, vol. 3(3), pages 77-84.
    • Handle: RePEc:ris:ajotap:0085
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    More about this item

    Keywords

    Risk Management; Internal Control Systems; Financial Performance; Commercial Banks; Rwanda;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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