Impact of Credit Risk Management in Improving Performance of Commercial Banks in Rwanda; A Case Study of BPR Ltd Kigali

The purpose of this study was to examine the impact of credit risk management in improving performance of commercial banks in Rwanda, this study was guided by the following research objectives to assess the effects of credit risk management and the investment decisions of Bank populaire in Rwanda, to determine the effects of liquidity risk management on the financial performance of Bank of populaire in Rwanda, to analyze the effects of market risk management on the financial performance of Bank of populaire in Rwanda, to establish the effects of operational risk management on the investment decisions of Bank of populaire in Rwanda. The researcher seeks to answer the following research questions what are the effects of credit risk management and the investment decisions of Bank of populaire in Rwanda Does liquidity risk management affect the financial performance of Bank of populaire in Rwanda What are the effects of market risk management on the financial performance of Bank of populalaire in Rwanda Does credit risk management affect the investment decisions of Bank of populalaire in Rwanda This study was adopted correlationaire research design, with a questionnaire and interview guide as the main primary tool (to collect primary data) and it also used the document analysis for collecting secondary data. The target population for the study was be drawn from 11 branches of Bank of populaire, Rwanda held in Kigali city, from each branch, three top managers were targeted. Therefore, the target population was 80 top managers. Systematic and simple random sampling technique was used to select a sample size under the study. Data were be collected by use of structured questionnaires addressed to the respondents. The data collected were analyzed using both descriptive and inferential statistics. Descriptive statistics include those of the mean, standard deviation and frequency distribution while inferential statistics involves use of spearmans coefficient correlations. The study determined that credit risk management has a positive on the performance of Commercial Banks in Rwanda. The study established that operational risks management has a positive effect on the performance of Commercial Banks in Rwanda. The study found that there is a correlation between credit policy, default risk management and credit risk management with performance of the banks. The study findings indicated that credit risk management (r=0.096, pless than0.01), liquidity risk management (r=0.347, pless than0.01), market risk management (r=0.506, pless than0.01) and operational risk management (r=0.612, pless than0.01) on financial performance. It however found that the banks do not involve experts and consultants in credit risk management thus recommendations were made for the banks to revise their credit risk management policies, open up and share information with other players on market risk thus involve consultants more in their market risk management and to be more proactive than reactive in risk management.