Effect of Loan Management Strategies on Financial Performance of Commercial Banks in Rwanda

Despite the efforts done by Commercial banks in ensuring that all loans are recovered on time, a substantial amount of these loans remain un-recovered. This problem does not only endanger the achievement of objectives, but also threaten bank's sustainability and efficiency. Therefore, there is a need of an effective loan management where loans should be very well managed to minimize potential risks that may affect the bank's performance.The study examined the effect of loan management strategies on financial performance of selected commercial banks in Rwanda. The study adopted descriptive research design. The study findings revealed client appraisal had a positive influence which was statistically significant (β = 0.399, p<0.05) while loan risk control showed a positive and significant effect (β = 0.204; p<0.05) on financial performance of commercial banks. The study concluded that there was a strong positive link between predictor variables andfinancial performance of selected commercial banks in Rwanda. The findings have revealed that loan management strategies help to improve financial performance and to achieve objective of bank