CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction
This chapter presents the summary of the findings, conclusions and recommendation to the study. This was presented according to study objectives which were; to examine the effect of client appraisal techniques on financial performance of micro finance support Centre ltd. Mbale Branch, examine the effect of credit risk control tools on financial performance in micro finance support Centre ltd. Mbale Branch and to examine effect collection policies on financial performance in micro finance support Centre ltd. Mbale Branch.
5.1 Summary of the findings
5.1.1 Background information
Most of the respondents were in the age bracket of 25-30 years with a percentage of 53.8%, 51.9% of the respondents were female who were more compared to the male, most of the respondents were married with 36.5%, majority of the respondents were Degree holders with 36.5%, most of staff members of MSC had spent a time period of 1-5 years with 44.2%.
5.1.1 The effect of client appraisal techniques on financial performance of micro finance institutions.
In this study, finding on this objective reveal the model summary using predictor loan reveals that adjusted R Square value is 0.727. This implies that 72.7% (0.727 *100) variations in financial performance is explained by client appraisal techniques while the remaining 27.3% is explained by other factors. It can be deduced from the regression that loan is significance to welfare of teachers at, F=205.744 (0.000b). Since significance calculated 0.000bis less than 0.05, the study therefore accepts the hypothesis which stated that “There is a strong positive and significant effect of client appraisal techniques on financial performance”.
5.1.2. Effect of credit risk control tools on financial performance in micro finance support Centre ltd. Mbale Branch.
Results on this objective showed that the model summary in table 4.18 above using predictor saving reveals that adjusted R Square value is 0.784. This implies that 78.4% (0.784 *100) variations in financial performance is explained by credit risk control tools while the remaining 21.6% is explained by other factors. It can be deduced from the regression that saving is significance to financial performance at, F=280.345 (0.000b). Since significance calculated 0.000bis less than 0.05, the study therefore reveals that “There is a strong positive and significant relationship credit risk control tools and financial performance.”
5.1.3. Effect collection policies on financial performance in micro finance support Centre ltd. Mbale Branch.
Findings on this objective reveal that the model summary using predictor collection policies reveals that adjusted R Square value is 0.766. This implies that 76.6% (0.766 *100) variations in financial performance is explained by collection policies while the remaining 23.4% is explained by other factors. It can be deduced from the regression that collection policies are of significance to financial performance at, F=252.454 (0.000b). Since significance calculated 0.000bis less than 0.05, the study therefore reveals that “There is a strong positive and significant relationship collection policies and financial performance.”
5.2 Conclusion
From the foregoing discussions, the following conclusions are drawn from the findings of the study.
5.2.1 The effect of client appraisal on financial performance.
The results show that client appraisal techniques significantly contribute to financial performance. The correlation between them is r= 0.323, with p=0.003. Therefore, if the organization gives more consideration to client appraisal techniques in line with the objectives of the organization, then financial performance will be improved.
5.2.2 The effect of credit risk control tools on financial performance
Results revealed that there is a positive significant relationship between credit risk control tools and financial performance. This is based on the obtained correlation coefficient of .326 (**) with a significance value of .003. This explains that in a situation where the credit risk control tools are properly assessed, then financial be effectively achieved.
5.2.3 The effect of collection policies on financial performance.
Findings in the table above revealed that there is a positive significant relationship between collection policy and financial performance in MSC. This is based on the obtained correlation coefficient of .298 (**) with a significance value of .002. This explains that in a situation where credit policies are effectively followed, then financial performance will effectively take place.
5.3Recommendations
5.3.1 The effect of client appraisal on financial performance.
The study recommends that there is need for MSC to enhance their client appraisal techniques so as to improve their financial performance. Through client appraisal techniques, MSC will be able to know the credit worthiness of clients and thus reduce non-performing loans.
5.3.2 The effect credit risk control tools on financial performance in micro finance support Centre ltd. Mbale Branch
Furthermore, MSC should reduce on their interest rates as these affect performance of loans. This will help to bring in more borrowers. The risk aspect should be given more attention because when not handled properly, the organization may end up losing.
5.3.3 The effect of microfinance asset financing services on the growth of SMEs.
The study also recommends that MSC should continue to strengthen its credit policies as this has been very effective in improving the organization’s financial performance.
5.4 Suggestions for further research.
The researcher recommends further research to establish the effect of credit management on profitability of micro finance institutions in Uganda.
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