EFFECTIVENESS OF BUDGETING PRACTICES AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN RWANDA CASE OF BANK OF KIGALI PLC PERIOD: 2018-2022

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.