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| The effect of liquidity risk on the financial performance of banking institutions in Kampala Metropolitan.
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ERINAH MUDONDO, Dr.Maina Enock, Assoc.Prof Mabonga Eric
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Abstract:
This study aims to investigate the impact of liquidity risk on the financial performance of banking institutions located in the Kampala Metropolitan area of Uganda. The study applied a descriptive research design. The sample was 201 individuals. This study used both primary and secondary data that was obtained from the response of the resdondents of the applied questionnaires and the face to face interview with some of the banking officers and from journal, articles and other researcher respectively. A descriptive, correlation and linear regression model was used in data analysis. The findings are that the model's R-square value is 0.032, indicating that approximately 3.2% of the variance in overall bank financial performance can be explained by the liquidity risk practices. The adjusted R-square, which takes into account the number of predictors in the model, is 0.027. The standard error of the estimate is 1.31700, which represents the average distance between the observed values of overall bank financial performance and the predicted values by the model. The study suggests that the respondents had moderately positive perceptions regarding the effectiveness of liquidity monitoring practices in the banking institutions in Kampala Metropolitan. These findings indicate that liquidity monitoring plays a role in influencing the financial performance of the banks, potentially contributing to their overall stability and success.
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