Implementation of internal control system and loan portfolio management in commercial banks in south Sudan: a case study of Eden commercial bank - Juba

Abstract

The study was set to examine how the implementation of internal control systems improve loan portfolio management in commercial banks in South Sudan, the study focused on Eden Commercial Bank-Juba Branch as a case study. The study objectively concentrated on whether the implemented internal control system has enhanced proper loan portfolio planning to guarantee effective loan portfolio management and whether the implemented internal control system has enhanced client screening to ensure effective loan portfolio management and on whether the implemented internal control system has improved the loan portfolio control to ensure useful loan portfolio management in Eden Commercial Bank-Juba. The study used a population of 75 selected from staff of ECB-Juba and a sample of 63 respondents was selected using Neumann’s formula (2000), but 60 respondents were used. Cross-section and descriptive design were employed and both quantitative and qualitative approaches of data collection were used. Data were analyzed using descriptive statistics, Pearson correlation, coefficient, regression analysis, and analysis of variance (ANOVA); where the statistics proved that r=.872; significance level was found and the hypothesis testing proved that there is a positive relationship between ICS and LPM in ECB-Juba. The study findings revealed that proper implementation of internal control system has enhanced, loan portfolio planning, client screening and loan portfolio control in ECB-Juba to ensure effective loan portfolio management. The study concluded that implemented internal control system has improved the loan portfolio control; enhances proper loan portfolio planning and client screening to ensure effective loan portfolio management in Eden Commercial Bank-Juba. The study recommends that the purchase of loans, loan participations, and loan portfolios should be governed by the credit principles and procedures contained in the Bank’s formal lending policy. The policy ordinarily should require; complete analysis and documentation of the credit quality of obligations to be purchased, an analysis of the value and lien status of the collateral and the maintenance of full credit information on the obligor during the term of the loan.