Credit risk management practices, risk culture and asset quality of financial institutions in Uganda.
No Thumbnail Available
Date
2026
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Busitema University
Abstract
This study examined the mediating role of risk culture on the relationship between credit risk management practices and asset quality among financial institutions in Uganda. Specifically, the study assessed the relationship between credit risk management practices and asset quality, examined the influence of risk culture on asset quality, established the relationship between credit risk management practices and risk culture, and investigated the mediating effect of risk culture on the relationship between credit risk management practices and asset quality. The study was anchored on Information Asymmetry Theory and the Theory of Planned Behavior, and adopted a cross-sectional survey design targeting 56 licensed financial institutions across Tier I, Tier II, Tier III and Tier IV categories in Uganda, selected through stratified and simple random sampling. Data were collected using a structured questionnaire administered to six respondents per institution and analyzed using SPSS Version 27, applying descriptive statistics, Pearson correlation, simple linear regression and Hayes' PROCESS Macro Model 4 for mediation analysis. Usable data were obtained from 44 of the 56 targeted institutions, a response rate of 78.6 percent. The findings revealed that credit risk management practices had
a significant positive effect on asset quality, risk culture had a significant positive effect on asset quality and was the strongest predictor among the study variables, and credit risk management practices had a significant positive effect on risk culture. The mediation analysis further revealed that risk culture fully mediates the relationship between credit risk management practices and asset quality, accounting for approximately 56.2 percent of the total effect. The study concludes that credit risk management practices improve asset quality both directly and, more substantially, indirectly through the risk culture they help to build, and recommends that financial institutions, regulators and boards treat risk culture as a deliberate, measurable outcome of their credit risk management efforts rather than an incidental by-product of formal compliance systems.
Keywords: Credit risk management, risk management practices, risk culture, asset quality, financial institutions
Description
Dissertation
Keywords
Citation
Ekwamu, S. (2026). Credit risk management practices, risk culture and asset quality of financial institutions in Uganda. [Unpublished dissertation]. Busitema University.