FINANCIAL MANAGEMENT PRACTICES AND FINANCIAL PERFORMANCE OF FINANCIAL INSTITUTIONS IN RWANDA A CASE STUDY OF BANK OF KIGALI PLC (2019-2022)

Abstract

The purpose of this study is to find out the effect of financial management practices and financial performance of financial institutions in Rwanda. The specific objectives: to determine the effect of financial management plans on financial performance of Bank of Kigali Plc; to examine the effect of decision making on financial performance of Bank of Kigali Plc; to find out the effect of assets management on financial performance of Bank of Kigali Plc and to establish the effect of working capital management on financial performance of Bank of Kigali Plc. This study was designed as descriptive study for Bank of Kigali Plc using the survey method; a case study was described the analysis of financial management practices and financial performance of financial institutions in Rwanda, the researcher acquired knowledge regarding the subject under topic. It is a qualitative analysis that involves careful observation of a situation. All the respondents from the population of Bank of Kigali Plc to respond to research questionnaires. The researcher was used questionnaires to collect data. As far as this study is concerned, the population was comprised by people of Bank of Kigali Plc; targeting 174 people. To describe target population of a study as the point of focus from which a generalization was made regarding the research findings. Thus, a sample size of 174 people as respondents was considered as the representatives of the total population. The researcher used primary and secondary data to get all information needed in this study, the quantitative data was analyzed using descriptive and inferential statistics after running the data collected through the Statistical Package for Social Sciences (SPSS). It also improves the institution's ability to plan future financial trends, thereby managing its operations. The study found that financial institutions effectively received dividend payments. The study therefore concludes that dividend payments among financial institutions are significant in promoting the financial performance of institutional banks in Kigali. By continuously focusing on annual dividends and effectively paying dividends to shareholders, companies are able to strengthen confidence and encourage investors to invest more in financing the company's operations. Finally, the study concludes that financial management practices are an important driver of improving the financial performance of MFIs. Microfinance institutions raise funds by effectively managing fixed assets and managing cash. Through ongoing and effective asset management, financial institutions are able to maintain liquidity levels and thereby manage their financial performance. The study recommends the management of Rwandan financial institutions to improve their efficiency and financial performance by applying effective working capital management tools. Management should adopt appropriate cash management and accounts payable management to ensure that the institution is able to finance its operations without financial constraints. Financial institutions are regulated by the Central Bank of Rwanda, and one of the institution's key policy requirements is to provide audited accounts annually. Therefore, the management of financial institutions should adhere to effective financial reporting and adhere to timeliness, accuracy, relevance and accountability to ensure that financial institutions comply with regulations. They must also make proper use of financial statements to effectively forecast financial trends and plan ahead.