Internal Control and Performance of Commercial Banks in Kampala, Uganda: A Case Study of UBA Bank, Kansanga-Kampala, Uganda

Abstract

This study explores the relationship between internal control mechanisms and the performance of commercial banks, focusing on UBA Bank located in Kansanga-Kampala, Uganda. The effectiveness of internal control systems is crucial for ensuring the stability and success of financial institutions, particularly in emerging economies like Uganda. By employing a case study methodology, data was collected through interviews, questionnaires, and document analysis to investigate the internal control practices implemented by UBA Bank and their impact on its performance indicators. The findings reveal a significant correlation between the strength of internal control measures and the financial performance of UBA Bank in Kampala. Through rigorous internal auditing, risk management, and compliance procedures, the bank has managed to mitigate operational risks, enhance transparency, and improve overall performance metrics such as profitability, asset quality, and operational efficiency. Moreover, the study identifies specific challenges and opportunities faced by UBA Bank in implementing effective internal control mechanisms within the unique context of the Ugandan banking sector. The study contributes to the existing literature by providing empirical insights into the role of internal control in shaping the performance of commercial banks in Uganda, particularly within the dynamic environment of Kampala. The findings underscore the importance of continuous evaluation and enhancement of internal control systems to adapt to evolving regulatory frameworks and emerging risks. Additionally, the study offers practical recommendations for UBA Bank and other commercial banks in Kampala to strengthen their internal control mechanisms and optimize performance outcomes in the competitive banking landscape of Uganda. Keywords: Commercial banks, UBA Bank, Kansanga-Kampala, SMEs