Abstract:
The purpose of this research was to assess the effect of internal controls on loan performance I commercial banks in Uganda. The methodology used in this research paper was a quantitative and cross sectional research. A sample size of 25 employees of Finance Trust Bank, Pallisa Branch was selected. The findings of the study were based on correlation analysis and regression analysis. Firstly the findings support that internal controls have a positive significant effect on loan performance, further the study established that information & communication had a statistically positive effect on loan performance, the study also revealed that control environment had a statistically positive impact on loan performance. Finally, the study revealed that risk management has effect on the loan performance. The highest direct effect on loan performance comes from information communication variables. The researcher therefore concludes that in order to improve loan performance, commercial banks need to embrace information and communication, control environment and risk management. The researcher recommends commercial banks to embrace information & communication by providing a better means through which all responsible persons can have access to all the required information and easily receive communication, they should also understand their control environment by having devoted and capable employees who adhere to the moral standards and integrity of the organization and assess and evaluate risks that may arise in all their activities.
