Abstract:
xv
The purpose of the study is to examine the effectiveness of Budgeting Practices and Financial
Performance of Commercial Banks in Rwanda” Case of Bank of Kigali Plc (2018-2022). The
specific objectives of the study are to assess how comprehensive planning affect financial
performance in Bank of Kigali PLC, to analyze the effect of Clear Objectives and Goals on
financial performance of Bank of Kigali, to examine the effect of Realistic Revenue and
Expense Projections on financial performance of Bank of Kigali, to examine the effect of
Communication and Transparency on financial performance of Bank of Kigali and to find out
the effect of Budgeting evaluation and financial performance of Bank of Kigali PLC. The
data were collected through questionnaire, interview and documentation techniques with
sample size equal 60 selected from 151 employees of Bank of Kigali Plc. The data were
analyzed statistical using SPSS with mean, Standard deviation and correlation. The findings
shows that (mean=4.342 and std.=.995 agreed that BANK OF KIGALI PLC’s budgeting is
always strategically planned. This signifies that the budgets of the Bank are developed in line
with the strategic plan to ensure that there is harmony of priorities. Secondly, all respondents
(mean=3.909 and std.=.873) agreed that the always participated in the budgeting process of
the Bank. Bank of Kigali Plc practice comprehensive planning to a great extent as evidenced
by the aggregate mean of (M=4.39, SD= 0.545). To a very great extent, Line managers
budget for their individual departments which are then combined to form the master budget
and the budget plan stipulates the steps that should be taken in the budgeting process as
indicated by mean scores of (M=4.57, SD= 0.471) and (M=4.53, SD= 0.534) respectively.
Bank of Kigali Plc practice Clear Objectives and Goals to a great extent as indicated by the
aggregate mean of (M=3.97, SD= 0.751). The most highly rated statements were “The
budgets control starts from the lowest levels of management and is refined and coordinated at
the higher levels” and “I have a clear understanding of my individual role in achieving the
organization’s objectives” with mean scores of (M=4.27, SD= 0.626) and (M=3.95, SD=
0.714) respectively. The Trend of net result of BANK OF KIGALI PLC of the research
period where from 2018-2019 the net income increased up to 17% and from 2018-2019 the
net income was 36% and becomes 3% from 2019-2020 and 35% in 2020-2021 and 15% from
2021 to 2022. The researcher recommends that comprehensive planning be enhanced in BK
to make plans and targets to which such bank must strive to achieve.
