CORPORATE GOVERNANCE AND FINANCIAL PERFORMANCE OF CENTENARY BANK

BY
NUWAMANYA ABEL
REG. NO: MPA/10/01/028 

A DISSERTATION SUBMITTED TO HIGHER DEGREES DEPARTMENT IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTERS DEGREE IN PUBLIC ADMINISTRATION OF UGANDA MANAGEMENT INSTITUTE

DECEMBER, 2012

DECLARATION
I, Abel Nuwamanya, do hereby declare that this is my original work and it has never been submitted anywhere else for any academic purposes.

Signed: ___________________________Date: ______________________________

APPROVAL
This dissertation has been done under our supervision and submitted with our approval for examination.

Signed: _____________________________Date: ____________________________
Dr. Gerald Karyeija

Signed: _____________________________Date: ____________________________
Ms. Pross Nagitta Oluka

DEDICATION
This dissertation is dedicated to the memory of my father Mr. John Wycliffe Kafundizeki and my mother, Mrs. Agnes Nalongo Kafundizeki who has dedicated his entire life to the upbringing of the entire family and wellbeing of vulnerable children. 

ACKNOWLEDGMENT
I want to thank the almighty God for this achievement and my life.
I also would like to thank my supervisors Dr.Gerald Karyeija and Ms. Pross  Nagitta Oluka and UMI Department of the Higher Degrees for their tireless efforts and support to ensure that this work is a success.

My special thanks to the management and staff of centenary bank that allowed me to use the materials and as well as respond to the research tools.

I would like to thank the entire MPA class 2010 for their support and encouragement throughout the course.

Finally my love and appreciation goes to my family and friends for the supports and sacrifice through the duration of this thesis

TABLE OF CONTENTS
DECLARATION
APPROVAL
DEDICATION
ACKNOWLEDGMENT
TABLE OF CONTENTS
LIST OF TABLES
LIST OF FIGURES
LIST OF ABBREVIATIONS
ABSTRACT
CHAPTER ONE
INTRODUCTION
1.0 Introduction
1.1 Background to the Study
1.1.1 Historical Background
1.1.2	Theoretical Background
1.1.3	Conceptual Background
1.1.4	Contextual Background
1.2 Statement of the Problem
1.3 Purpose of the Study
1.4 Objectives of the Study
1.5 Research Questions
1.6 Hypotheses
1.7 Conceptual Framework
1.8	Significance of the Study
1.9 Justification of the Study
1.10 Scope of the Study
1.10.1	Content Scope
1.10.2	Geographical Scope
1.10.3 	Time Scope
1.11 	Operational Definitions of Terms and Concepts
CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
2.1 Theoretical Review
2.2 Corporate Governance and Financial Performance
2.2.1 Board Size & Independence and Financial Performance
2.2.2 Ownership Structure and Financial Performance
2.2.3 Transparency & Disclosure and Financial Performance
2.3 Summary of Literature Review
CHAPTER THREE
METHODOLOGY
3.0 Introduction
3.1 Research Design
3.2 Study Population
3.3 Determination of the Sample Size
3.4 Sampling Techniques and Procedures
3.5 Data Collection Methods
3.5.1 Questioning
3.5.2 Interviewing
3.5.3 Documentary Review
3.6 Data Collection Instruments
3.6.1 Questionnaires
3.6.2 Interview Guides
3.6.3 Documents
3.7 Validity and Reliability
3.7.1 Validity
3.7.2 Reliability
3.8 Procedure of Data Collection
3.9 Data Analysis
3.9.1 Quantitative Data Analysis
3.9.2 Qualitative Data Analysis
3.10 Measurements of the Research Variables
CHAPTER FOUR
PRESENTATION, ANALYSIS AND INTERPRETATION OF RESULTS
4.0 Introduction
4.1 Response Rate
4.2 Demographic Characteristics of Respondents
4.2.1 Gender of Respondents
4.2.2 Age of Respondents
4.2.3 Education Level of Respondents
4.2.4 Work Tenure
4.3 Descriptive Statistics for the Study Variables
4.3.1 Descriptive Statistics for Board Size & Independence and Financial Performance
4.3.2 Descriptive Statistics for Ownership Structure and Financial Performance
4.3.2 Descriptive Statistics for Transparency & Disclosure and Financial Performance
4.4 Correlation Analysis
4.4.1 Relationship between Board Size & Independence and Financial Performance
4.4.2 Relationship between Ownership Structure and Financial Performance
4.4.3 Relationship between Transparency & Disclosure and Financial Performance
4.5 Regression Analysis
CHAPTER FIVE
SUMMARY, DISCUSSION, CONCLUSION AND RECOMMENDATIONS
5.0 Introduction
5.1 Summary of the Findings
5.1.1 Board Size & Independence and Financial Performance
5.1.2 Ownership Structure and Financial Performance
5.1.3 Transparency & Disclosure and Financial Performance
5.2 Discussion of Research Findings
5.2.1 Board Size & Independence and Financial Performance
5.2.2 Ownership Structure and Financial Performance
5.2.3 Transparency & Disclosure and Financial Performance
5.3 Conclusions
5.3.1 Board Size & Independence and Financial Performance
5.3.2 Ownership Structure and Financial Performance
5.3.3 Transparency & Disclosure and Financial Performance
5.4 Recommendations
5.4.1 Board Size & Independence and Financial Performance
5.4.2 Ownership Structure and Financial Performance
5.4.3 Transparency & Disclosure and Financial Performance
5.5 Limitations and Contributions of the Study
5.6 Areas for Further Research
REFERENCES
APPENDICES
APPENDIX I: INTERVIEW GUIDE
APPENDIX II: QUESTIONNAIRE

LIST OF TABLES

Table 1: Sample Size Selection	23
Table 2: Cronbach’s Alpha coefficient for the study Variables 	28
Table 3: Frequency Distribution for gender of the Respondents	32
Table 4: Frequency Distribution for Age of the Respondents	33
Table 5: Frequency Distribution for Education Level of Respondents	34
Table 6: Frequency Distribution for Work Tenure	35
Table 7: Descriptive Statistics for Board Size, Independent and Financial Performance	36
Table 8: Descriptive Statistics for Ownership Structure and Financial Performance	40
Table 9: Descriptive Statistics for Transparency and Disclosure and Finance	43
Table 10: Relationship between Study Variables	44
Table 11: Regression of Corporate Governance with Financial Performance	48

LIST OF FIGURES

Figure 1:  Conceptual Framework…………………………………………………10

LIST OF ABBREVIATIONS

BOD		-	Board of Directors
BoU		-	Bank of Uganda
CB		-	Centenary Bank
CBO		-	Community Based Organisation
CEOs		-	Chief Executives
CVI		-	Content Validity Index
DV		-	Dependent variable
ICB		-	International Credit Bank
IV		-	Independent Variable
MOFPED	-	Ministry of Finance Planning and Economic Development
NBC		-	National Bank of Commerce
OECD		-	Organization for Economic Cooperation and Development	
SPSS		-	Statistical Package for Social Scientists
UGX		-	Uganda Shillings
UK		-	United Kingdom
sh3m		-	Shillings Three Millions

ABSTRACT

The study examined the extent to which corporate governance affects financial performance, with respect to Centenary Bank. Corporate Governance comprised of board effectiveness, board size and ownership structure. The study objectives included assessing the extent to which board size & independence affects performance, examining the relationship between ownership structure and financial performance, and finding out the relationship between transparency & disclosure and financial performance. A cross sectional and survey study design was used supported by both qualitative and quantitative approaches. From a Two hundred fifty accessible population, one hundred ninety five respondents were drawn. Data collection methods used included interviews for qualitative data and questionnaire used for quantitative data.  A response rate of   90.3% was realised.
Ownership structure and financial performance, the bank should ensure that  better management strategies be adopted locally within in the bank in order to achieve better financial performance and compete favorably within the financial market with foreign banks
Transparency & Disclosure and financial performance, the bank should ensure that there is high level of transparency and disclosure must be mandatory. It should avoid information asymmetry that can affect its level of financial performance.

CHAPTER ONE
INTRODUCTION
1.0 Introduction
The chapter gives an overview of how corporate governance can impact on financial performance of commercial banks in Uganda. Corporate performance is an important concept that relates to the way and manner in which financial resources available to an organization are judiciously used to achieve the overall corporate objective of an organization, it keeps the organization in business and creates a greater prospect for future opportunities. In this study, corporate governance is the independent variable, while financial performance is the dependent variable. This chapter presents the historical, theoretical, conceptual, and contextual background, and a statement of the problem, aim of the study in achieving the objectives, research questions, hypothesis, significance, the scope of the study, justification and operational definitions of the terms and concepts, all in relations to the study variables mentioned above.
1.1 Background to the Study
1.1.1 Historical Background
The concept of corporate governance had existed from antiquity. Historical records show that corporate governance has a long history that dated back to the ancient times where existed what is called tribal communes, which supervised the activities of the tribe as well as individual members of the tribe to ensure conformity with tribal norms. As time went by, the tribal form later matured to the level of agrarian communities whereby the concept of family came to the fore with the activities of family members were monitored by the family councils. Also, in his study on corporate governance, Kurkure (2006) submits on its historical development that: In Roman Empire, specific corporate bodies such as municipal bodies were developed to manage public affairs with transparency for common good. In the Middle East, the nomadic tribes had their councils to ensure fair play and justice. The evolution of Christianity and Islam in the Middle East placed the responsibility of governance on religion.

Corporate Governance stems from the Great Depression of the 1930s, when different countries set off in different directions that wrought today’s differences in corporate governance. Financial catastrophes in many countries in the 1920s and 1930s, and ideological reactions to them, deeply affected their subsequent evolution of corporate control. In the 1930s, the United States was deeply influenced by the progressive ideology of Louis Brandeis, Thorsten Veblen, and others. Roosevelt’s New Dealers realigned American institutions to this ideology when the Great Depression undermined popular faith in America’s older institutions. Dispersing economic power as widely as possible was a key part of this. Thus, the American government undertook to break up that country’s great pyramidal corporate groups by banning large pyramidal groups from controlling public utility companies, applying taxes to inter-corporate dividends, and strengthening public shareholders’ property rights over their investments. This fortuitous coincidence of ideology and opportunity to act created America’s exceptional large corporate sector composed mainly of freestanding widely held firms. Corporate Governance in the UK was weak in the first part of the 20th century, with shareholders playing a minor role in corporate issues. However, Sylla and Smith (1995) argue that as early as 1890 financial markets were already developed in the UK. According to Mork and Steier (2005) the UK`s economy was comprised mainly of risky companies known as pyramid firms. A pyramid structure is defined as “a structure in which an apex shareholder, usually very wealthy family, controls a single company, which may or may not be listed. The company then holds control blocks in the other listed companies”.

In Uganda, there was no much information about corporate governance not until the late 1990`s where renown financial institutions like International Credit bank, cooperative bank, Green land Bank and others started collapsing that the concept became of keen interest to the public and nation as a whole. According to the Uganda Institute of Corporate Governance, experiences with bank failures, together with other corporate crises, have in many cases been associated with governance and financial performance. Corporate Governance issues are also partly to blame for the relatively financial performance (short lifespan) of many businesses in Uganda. In addition, many private sector firms are family businesses, with appointees to the boards being handpicked or arbitrarily chosen, little consideration being given to their competence, integrity and technical ability to guide the enterprise. The end result has been many a board member having limited understanding of their responsibilities and of related implications for the investment portfolios entrusted to them (http://www.icgu.or.ug).
1.1.2	Theoretical Background
The stakeholder theory was used to guide this study. A second, related, appeal of the enlightened stakeholder theory is that it offers a simple criterion to enable managers to decide whether they are protecting the interests of all stakeholders (Jensen, 2000). The stakeholder theorists argue for the primacy of shareholder interests basing on the famous dictum from Dodge Bros versus Ford that “the corporation exists for the benefit of the shareholders” (Boatright, 1994, Goodpaster, 1991). The theory has been supported by many however; others have widened its scope by considering all groups of stakeholders. According to (Freeman and Phillips, 2002) the central idea is that an organization’s success depends on how well it manages the relationships with key groups such as creditors, employees, customers, suppliers, communities, and others that can affect the realization of its purpose. The manager’s job is to maintain the support of all of these groups, balancing their interests, while making the organization a place where stakeholder interests can be maximized over time. Similarly, (Etzioni, 1998) supports the stakeholder view but maintains that the same basic claim should be extended to all those who invest in the corporation such as the employees, the community, creditors and, under some conditions, clients.

Stakeholder theory is managerial in that it reflects and directs how managers operate rather than primarily addressing management theorists and economists. The focus of stakeholder theory is articulated in two core questions (Freeman 1994). First, it asks, what is the purpose of the firm? This encourages managers to articulate the shared sense of the value they create, and what brings its core stakeholders together. This propels the firm forward and allows it to generate outstanding performance, determined both in terms of its purpose and marketplace financial metrics. Second, stakeholder theory asks, what responsibility does management have to stakeholders? This pushes managers to articulate how they want to do business—specifically, what kinds of relationships they want and need to create with their stakeholders to deliver on their purpose. Today’s economic realities underscore the fundamental reality we suggest is at the core of stakeholder theory: Economic value is created by people who voluntarily come together and cooperate to improve everyone’s circumstance. Managers must develop relationships, inspire their stakeholders, and create communities where everyone strives to give their best to deliver the value the firm promises. Certainly shareholders are an important constituent and profits are a critical feature of this activity, but concern for profits is the result rather than the driver in the process of value creation. Managers acts on behalf of other stakeholders to protect and maximize shareholders wealth through firm performance (Davis, Schoorman & Donaldson, 1997). In this perspective, company executives and managers working for the shareholders, protects and make profits for the shareholders. Daly et al., (2003) argued that in order to protect their reputations as decision makers in organizations, executives and directors are inclined to operate the firm to maximize financial performance as well as shareholders’ profits. In this sense, it is believed that the firm’s performance can directly impact perceptions of their individual performance.
1.1.3	Conceptual Background
The study was guided by the two concepts of Corporate Governance and financial performance the respective independent and dependent variables. According to Economist Intelligence Unit (2002), Corporate Governance is a system by which any business corporations are managed and controlled with structures that elaborate the distribution of duties and responsibilities among different people in the corporation or firm. These people are the board, mangers, shareholders and other stakeholders, who define out the rules and procedures for making decisions on corporate affairs, where firm or institutional objectives are set and means of attaining those objectives and monitoring performance. Corporate governance can be viewed as a process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long term shareholder value, whilst taking into account the interest of other stake holders (Abdul Hadi et al. 1999). Considering the above definition of corporate governance, it can be realized that this does not only apply to shareholders but other stakeholder s well which involved either directly or indirectly with the firm.

Further still OECD (1999) provides a more encompassing definition of corporate governance.  It defines corporate governance as the system by which business corporations are directed and controlled.  On the other hand financial performance  refers to a  situation where  depositor (s)  funds  are  safe  in a  stable  banking system. The financial soundness of a financial institution may be strong or unsatisfactory varying from one bank to another (BoU, 2002).  In this study, performance is discussed and defined based on profitability, return on investment, capital adequacy and asset quality. 
1.1.4	Contextual Background
Over the years, research has found out that financial institutions specifically the central bank has been critically important for industrial growth, corporate governance of firms, and capital allocation. When financial institutions efficiently identify and retain clients, mobilize and allocate funds, this lowers the cost of capital to firms, boosts capital formation, and stimulates productivity growth. Given the importance of financial institutions, the governance of banks themselves has assumed a central role. When any bank manager faces sound governance mechanisms, he or she is more likely to allocate capital efficiently and exert effective corporate governance over the firms they fund. In contrast, when any banks manager enjoys enormous discretion to act in his or her own interests rather than in the interests of shareholders and debt holders, and then bank will be correspondingly less likely to allocate society’s savings efficiently and exert sound governance over firms. 

1.2 Statement of the Problem
Centenary Bank is one of the leading commercial banks in Uganda, which was a pure micro finance Bank until 2003. It started as a community based organization (CBO) in 1983, turned into a Trust Fund around 1985 and finally became a fully fledged commercial bank in 1993. The bank provides a number of products and services ranging from deposit accounts, credit products, electronic banking services, money transfer services and offshore banking transactions. 
Despite its current expansion all over Uganda, Centenary bank’s financial performance has not been adequate. Existing data indicates that although its operation has grown, evidence on the ground indicates that its overall financial performance has shown declining trends over the years. There has been decline in its profitability ratio from 21% to 15% in the period between 2010 and 2011, while its capital adequacy percentage decline from 33% to 23% in the period between 2010 and 2011. Besides, its return on investment ratios also declined from 31% to 20% in the period between 2010 and 2011. The researcher suspects this could be attributed to the existing corporate governance structures of the bank which may be a determinant of financial performance. This study therefore intends to investigate whether the above discrepancies is due to its existing corporate governance structures, which have been used by other scholars in predicting firm performance.
1.3 Purpose of the Study
The study aimed at examining the relationship between corporate governance and financial performance of centenary bank in Uganda.
1.4 Objectives of the Study
i)	To examine the relationship between board size & independence and financial performance of centenary bank;
ii)	To examine the relationship between ownership structure and financial performance of centenary bank;
iii)	To examine the relationship between transparency & disclosure and financial performance of centenary bank.
1.5 Research Questions
i)	What is the relationship between board size & independence and financial performance of centenary bank?
ii)	What is the relationship between ownership structure and financial performance of centenary bank?
iii)	What is the relationship between transparency & disclosure and financial performance of centenary bank?
1.6 Hypotheses
H1:	Board size & independence significantly affects financial performance of commercial banks; 
H2:	ownership structure significantly affects financial performance of commercial 
banks;
H3:	Transparency & disclosure significantly affects financial performance of commercial banks.
1.7 Conceptual Framework
The conceptual model in figure 1 below, examines the relationship between corporate governance and financial performance of centenary bank. The independent variable was corporate governance comprising of board size & independence, ownership structure, and disclosure and the dependent variable was financial performance. A good corporate governance framework ensures the Board’s accountability to diverse stakeholders, and promotes transparency (OECD, 2005). Corporate governance is concerned with ways in which all parties interested in the well-being of the firm (the stakeholders) attempt to ensure that managers and other insiders take measures or adopt mechanisms that safeguard the interests of the stakeholders. Such measures are necessitated by the separation of ownership from management, an increasingly vital feature of the modern firm (Yermack, 1996). A typical firm is characterized by numerous owners having no management function, and managers with no equity interest in the firm. Shareholders, or owners of equity, are generally large in number, and an average shareholder controls a minute proportion of the shares of the firm. This gives rise to the tendency for such a shareholder to take no interest in the monitoring of managers, who, if left to themselves, may pursue interests different from those of the owners of equity. For example, the managers might take steps to increase the size of the firm and, often, their pay, although that may not necessarily raise the firm’s profit, the major concern of the shareholder (Sanda et al., 2005). Fama (1980) also asserts that a firm can be viewed as a team, whose members realize that in order for the team to survive, they must compete with other teams, and that the productivity of each member has a direct effect on the team and its members. Thus, within the firm, each manager has the incentive to monitor the behaviour of other managers, whether subordinates or superiors.

Fig. 1:		Conceptual Model
Independent Variable 							Dependent Variable 

        Corporate Governance

Financial Performance 
•	Profitability
•	Return on investment
•	Capital adequacy
•	Asset quality

Board Size & Independence

Ownership Structure

Transparency & Disclosure

Source: Developed from Faizul et al., (2007); Fama (1980); Sanda et al., (2005).

1.8	Significance of the Study
i)	The study may add more knowledge to the already existing literature on corporate governance and financial performance of centenary bank;
ii)	The study findings may also enhance further research on the impact of corporate governance on financial performance of centenary bank locally and internationally;
iii)	The study may lead to the identification of better corporate governance strategies that are critical for improved financial performance of centenary bank.
iv)	The commercial bank used in the study may benefit from this research by improving on their corporate governance policy that may enhance financial performance.

1.9 Justification of the Study
This research was carried out with interest of understanding how corporate governance affects financial performance of the centenary Bank in Uganda. Further still it will aid the centenary bank management in coming up with more diverse means or remedies to any existing obstacles to the banks performance as well as help existing stakeholders understanding the importance of improved financial performance. This study examined the extent to which corporate governance affect financial performance of the centenary bank in Uganda. 

1.10 Scope of the Study
1.10.1	Content Scope
The study examined the impact of corporate governance on financial performance of commercial bank with centenary as a case study. Focus was put on finding out how corporate governance affects the financial performance of centenary bank in Uganda.
1.10.2	Geographical Scope
The study was carried out at Centenary bank offices located at Mapeera house, Kampala Road in Kampala Uganda. This is because it is where the top management, senior managers, and board members have their offices.
1.10.3 	Time Scope
The study focused on a period of five  years.  This is the time when most financial institutions were facing a lot of financial difficulties and were on the blink of closure resulting from poor governance that contributed to expected financial performance.

1.11 	Operational Definitions of Terms and Concepts
•	Corporate Governance: as the system by which business corporations are directed and controlled.  
•	Financial performance:  is the measure of the extent to which objectives of an organization are achieved in relation to defined standards and targets for each objective (Monaghan, 2000; Dess and Shaw, 2001).

CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction 
The literature reviewed in this chapter is based on the relationship between corporate governance and financial performance of commercial banks in Uganda. It involved analysing corporate governance comprising of board independence, ownership structure, and disclosure and their impact on financial performance. It is mainly based on literature reviewed in developed countries. The review of the literature will examine practical and empirical evidence on the relationship between corporate governance and financial performance of commercial banks in relation to the Uganda situation.
2.1 Theoretical Review
The stakeholder theory was used to guide this study. A second, related, appeal of the enlightened stakeholder theory is that it offers a simple criterion to enable managers to decide whether they are protecting the interests of all stakeholders (Jensen, 2000). The stakeholder theorists argue for the primacy of shareholder interests basing on the famous dictum from Dodge Bros versus Ford that “the corporation exists for the benefit of the shareholders” (Boatright, 1994, Goodpaster, 1991). The theory has been supported by many however; others have widened its scope by considering all groups of stakeholders. According to (Freeman and Phillips, 2002) the central idea is that an organization’s success depends on how well it manages the relationships with key groups such as creditors, employees, customers, suppliers, communities, and others that can affect the realization of its purpose. The manager’s job is to maintain the support of all of these groups, balancing their interests, while making the organization a place where stakeholder interests can be maximized over time. Similarly, (Etzioni, 1998) supports the stakeholder view but maintains that the same basic claim should be extended to all those who invest in the corporation such as the employees, the community, creditors and, under some conditions, clients.

Stakeholder theory is managerial in that it reflects and directs how managers operate rather than primarily addressing management theorists and economists. The focus of stakeholder theory is articulated in two core questions (Freeman 1994). First, it asks, what is the purpose of the firm? This encourages managers to articulate the shared sense of the value they create, and what brings its core stakeholders together. This propels the firm forward and allows it to generate outstanding performance, determined both in terms of its purpose and marketplace financial metrics. Second, stakeholder theory asks, what responsibility does management have to stakeholders? This pushes managers to articulate how they want to do business—specifically, what kinds of relationships they want and need to create with their stakeholders to deliver on their purpose. Today’s economic realities underscore the fundamental reality we suggest is at the core of stakeholder theory: Economic value is created by people who voluntarily come together and cooperate to improve everyone’s circumstance. Managers must develop relationships, inspire their stakeholders, and create communities where everyone strives to give their best to deliver the value the firm promises. Certainly shareholders are an important constituent and profits are a critical feature of this activity, but concern for profits is the result rather than the driver in the process of value creation. Managers acts on behalf of other stakeholders to protect and maximize shareholders wealth through firm performance (Davis, Schoorman & Donaldson, 1997). In this perspective, company executives and managers working for the shareholders, protects and make profits for the shareholders. Daly et al., (2003) argued that in order to protect their reputations as decision makers in organizations, executives and directors are inclined to operate the firm to maximize financial performance as well as shareholders’ profits. In this sense, it is believed that the firm’s performance can directly impact perceptions of their individual performance.
2.2 Corporate Governance and Financial Performance 
According to Sanda et al., (2005), corporate governance is concerned with ways in which all parties interested in the well-being of the firm (the stakeholders) attempt to ensure that managers and other insiders take measures or adopt mechanisms that safeguard the interests of the stakeholders. Such measures are necessitated by the separation of ownership from management, an increasingly vital feature of the modern firm. Barry (2003) views corporate governance as the system by which organizations are directed and managed. He states that corporate governance influences how the objectives of a firm are set and achieved, how risk is monitored and assessed, and how performance is optimized. Good corporate creates value added (through entrepreneurism, innovation, development and exploration) and provide accountability and control systems commensurate with the risks involved. The key factors in corporate governance are direction, leadership and accountability, combined with systems and processes. Direction, leadership and accountability are the roles of the board of a company or the governing body of an organization and systems and processes are the means by which they meet those obligations.
A typical firm is characterized by numerous owners having no management function, and managers with no equity interest in the firm. Shareholders, or owners of equity, are generally large in number, and an average shareholder controls a minute proportion of the shares of the firm. This gives rise to the tendency for such a shareholder to take no interest in the monitoring of managers, who, if left to themselves, may pursue interests different from those of the owners of equity. For example, the managers might take steps to increase the size of the firm and, often, their pay, although that may not necessarily raise the firm’s profit, the major concern of the shareholder. Early research in this area is due to Jensen and Meckling (1976) who identify two types of conflicts: One from managerial moral hazard since, in not having full ownership, managers are unable to capture the full benefits of their efforts. As well, they do not bear the full costs of their actions. This conflict has been described as “managerialism” or “managerial agency.” Furthermore, the complexity of the coordination task in the modern firm (corporation), imperfect information (uncertainty), and bounded rationality (the limit to one’s knowledge and therefore, to the ability to contractually provide for all contingencies) all combine to necessitate the vesting of managers with discretion. Such discretion, however, creates opportunities for self-interested behaviour by the managers. This temptation to self-aggrandize is reinforced by having different sets of information available to agents and principals (whether it be managers, members of the board and other stakeholders). This information asymmetry can mean that those who in practice discipline the managers may not be able to monitor cheaply the performance of the managers. 

Disciplining errant managers can also be a difficult problem when there are missing markets, such as the market for corporate control. And even when no markets are missing, it seems that management has become increasingly adept at entrenching themselves. The literature on corporate governance tells of chief executives vested with wide discretionary powers who have exploited this scope to entrench themselves and their allies on the board, sometimes using the resources of the organization to perpetuate their tenure. In all industrialized nations, the matters of corporate responsibility and social accountability by firms and multinational corporations have become increasingly relevant (Aoki, 1984).

2.2.1 Board Size & Independence and Financial Performance
Corporate boards of directors play a central role in the corporate governance of modern companies, and hence understanding this relationship is very important to our understanding of corporate governance. Much of the public debate on board structure has centered on pressure for smaller board size. It is argued that although larger board size initially facilitates key board functions, there comes a point when larger boards suffer from coordination and communication problems and hence board effectiveness (and firm performance) declines (Lipton and Lorsch, 1992; and Jensen, 1993). 

According to (OECD, 1999), OECD principles call on businesses to recognize and safeguard stakeholders’ rights, including legitimate interests and information needs in line with improved performance. These principles call on boards to be truly accountable to shareowners and to take ultimate responsibility for their firm’s adherence to a high standard of corporate behavior and ethics. Effective corporate governance requires due diligence in rallying the support and commitment of the broad network of business stakeholders, including shareowners, employees, customers and communities. If stakeholders are adversely affected by a company’s actions, shareowner value will suffer. With the growth in pension and insurance funds and other institutional investors, shareowners are increasingly also company stakeholders, such as employees or customers. Therefore, these groups’ needs are increasingly interconnected.

Pfeffer (1972) views boards mainly as a mechanism for co-opting other external organizations and individuals, which is consistent with his view of firms as dependent on external resources. He hypothesizes that board composition in terms of insiders and outsiders, the number of directors with financial expertise, and the number of lawyers on boards depends on the firm’s need for creating links with the external environment (for example, the need to deal with regulators and banks).
2.2.2 Ownership Structure and Financial Performance
The structural and organizational differences between foreign and domestic banks may have implications for differences in cost structures and scale and scope economies. These differences result from different management strategies, differences of the markets they serve, knowledge of the local market, international synergies, and regulation.  A parent company of a foreign bank can provide its subsidiary with access to international markets, international diversification, and access to low-cost funds. These factors represent benefits for the foreign subsidiaries with cost advantages. However, a lack of familiarity of the foreign bank’s parent company with the nature and features of the local markets and difficulties with adaptation of home country strategy into the local markets may obstruct its development. A final remark is that foreign banks operating in a host market are subject to two processes: the first is due to their ownership by a foreign multinational bank and the second is due to their participation in the host banking system.

Foreign ownership may have an impact on bank profitability due to a number of reasons: First, the capital brought in by foreign investors decrease fiscal costs of banks’ restructuring (Tang et al., 2000). Second, foreign banks may bring expertise in risk management and a better culture of corporate governance, rendering banks more efficient (Bonin et al., 2005). Third, foreign bank presence increases competition, driving domestic banks to cut costs and improve efficiency (Claessens et al., 2001). Finally, domestic banks have benefited from technological spillovers brought about by their foreign competitors. For these reasons, an examination of the impact of foreign ownership on banks performance is very important. Most of the efficiency studies of foreign-owned banks in developed countries find that the disadvantages outweigh the advantages. Foreign-owned banks are found to be less efficient than domestically-owned institutions with the possible exception of U.S. banks operating abroad (DeYoung, 1996), although a few studies find that foreign institutions are about equally efficient on average as domestic institutions (Vander Vennet1996). In contrast, some research suggest that the advantages of foreign ownership may outweigh the disadvantages in developing nations (Claessens, Demirgüç-Kunt, and Huizinga 2001) 

Other research on the impact of foreign ownership on banks' performance in developing nations finds that foreign ownership and entry and fewer restrictions on these banks are associated with more competitive national banking systems (Claessens  et al (2004). Some also find positive effects of foreign ownership on business credit availability, (Klapper 2004). This may be due to the superior access to capital markets or technologies or to problems of the domestically owned institutions in these nations. Foreign ownership was found out to be of great significance to financial performance.  For example; the capital brought in by foreign investors decrease fiscal costs of banks’ restructuring, secondly, foreign banks may bring expertise in risk management and a better culture of corporate governance, rendering banks more efficient and finally foreign bank presence increases competition, driving domestic banks to cut costs and improve efficiency.
2.2.3 Transparency & Disclosure and Financial Performance 
According to Finkelstein (2000), corruption is just one type of principal – agent inefficiency. This is important for developing countries where corruption is often endemic. In a country like the United States, however, where there is a strong respect for the rule of law and a very low level of corruption, one might think that the gains from more transparency would be smaller. But graft and corruption are only at one extreme end of the principal – agent problem. The principal – agent problem deals not only with agents who would outright steal from their principals when the principals are not looking, but also with agents who simply do not perform well because they lack an incentive to exert themselves. Therefore benefits of transparency are not limited to combating corruption, but extend to making all principal – agent relationships more efficient and effective.

Transparency is a process that: (1) requires us to disclose (2) substantively and truthfully (3) our performance (4) to those who are entitled to know (McTigue, 1990). In order for transparency to be effective, disclosure must be mandatory. Otherwise, the agent’s incentive would be to disclose her performance when it is convenient to her and to withhold information when it is not. To avoid an information asymmetry, a policy of transparency must compel an agent to disclose her performance 100 percent of the time. Similarly, disclosures must be full and truthful. Partial disclosure does not eliminate the potential for information asymmetries if inconvenient parts of one’s performance can be withheld (Penno, 1997). That disclosures must be truthful should go without saying; agents cannot be held accountable unless the information available to principal about the agent’s performance is accurate. Therefore, what transparency, properly understood, requires us to disclose is not merely our actions but our performance as well? Our performance is the result of our actions. In some cases, our actions and our performance are practically one and the same.  In most instances, however, evidence of actions or activity is not evidence of good performance.  Only if the principal can measure the agent’s performance and not simply monitor her activity can the agent be held accountable.

Transparency requires us to make substantive and truthful disclosures of our performance but only to those who are entitled to the information. As an employee, you may have an obligation to disclose your performance to your employer but not to your doctor or your mailman. There is a principal – agent relationship in the first case but not in the latter cases. A potential principal-agent relationship might also trigger an obligation to disclose (Penno, 1997). For example, a company’s management must disclose the corporation’s performance not only to its board of directors and shareholders but to potential shareholders as well.
2.3 Summary of Literature Review
Conclusively, Smallman  (2004) concludes that the connection between corporate governance and organizational financial performance lies in the multi-dimensional nature of good governance. Narrowly conceived, corporate governance involves ensuring compliance with legal obligations, and protection for shareholders against fraud or organizational failure. Without governance mechanism in place, in particular a board, to direct and control managers, they might run away with the profits. Understood in this way, good governance minimizes the possibility of poor organizational financial performance.

CHAPTER THREE
METHODOLOGY
3.0 Introduction 
This chapter presents a description of research methodology that was used to carry out the study. It covered the research design, study population, determination of sample size, sampling techniques and procedures, data collection methods , data collection instruments, Validity and reliability of research instruments, Procedure of data collection, data analysis and measurement of Variables.
3.1 Research Design
This study was cross sectional combined with descriptive research design. This is because it observes all population or a representative subset at one specific point in time. Besides, it also allows large amount of data to be collected over a short time period. Furthermore, since it observes a representative subset at one specific point in time, problems arising from recurrent mistakes in data collection instruments are also minimized as it does not suffer from unavailability of sample used in previous observation as in longitudinal study. The study was both descriptive and analytical in nature.  Descriptive approach focused on quantitative aspect of the study that involved obtaining information about the situation that existed, while analytical approach focused on qualitative aspect of the study to determine in depth inquiry into the existing situation or phenomenon under study based on facts findings (Amin, 2005; Dawson, 2002; Kumar, 2005).
3.2 Study Population 
For the purpose of this study, a target population of 250 respondents was used. This comprised of (10) board members (both Executive and Non-Executive), managers (20), supervisors (25), administrators (90) and other bank staff (105).
3.3 Determination of the Sample Size 
The sample size was determined using Krejcie and Morgan (1970) table guide for sample selection which states that a sample will always be selected as a representative of the given population. According to the table, a population of 250 gives a sample size of 195. Therefore a total sample size of 195 was used for this study as explained in table 1 below:

Table: 1 	Showing Sample Size Selections

Category  	
Population 	
Sample Size	
Sampling Technique	

Board members	
10	
5	
Purposive Sampling 	

Managers	
20	
15	
Simple Random Sampling	

Supervisors	
25	
20	
Simple Random Sampling	

Administrators	
90	
80	
Simple Random Sampling	

other Bank staff	
105	
75	
Simple Random Sampling	

Total 	
250	
195		

Source: Modified based on Krejcie and Morgan (1970), Table Guide for Sample Determination

3.4 Sampling Techniques and Procedures
For the purpose of this study, both purposive and simple random sampling methods were used for selecting the sample. Random sampling involves picking a sample at a random without discrimination and all samples are given equal chances of being selected for the study. Mugenda and Mugenda (1999) further explain the goal for simple random sampling is to achieve desired presentation from the members of accessible population. According to Sekran (2003), purposive sampling involves the choice of objects which are advantageously placed to provide the information required. They could be reasonably expected to have expert knowledge by the virtue of having gone through experiences and processes themselves and might perhaps be able to provide data of information to the researcher. Therefore for the purpose of this study, 15 managers, 20 supervisors, 80 administrators, 75 bank staff, and 5 board members of centenary bank were randomly and purposively sampled by the researcher.
3.5 Data Collection Methods
Both qualitative and quantitative data collection methods were employed in the study. Use of multiple data collection methods checks validity of study findings. This allowed generalisation of results to target population.
3.5.1 Questioning
Questions were asked as a method of getting information from respondents. Self-administered Questionnaires was used to collect data from all the respondents in the study sample in table 1 above. Questionnaires were used because they are easy to employ to big numbers of respondents and do not require the presence of the researcher or research assistant.

3.5.2 Interviewing
An interview is a face to face interaction between the interviewer and interviewee .The interview permits the researcher to follow up leads and thus obtain more data and greater clarity. The respondents in the sample in 1 above were interviewed so as to get an in-depth understanding of the study theme.
3.5.3 Documentary Review
The method was aimed at collecting information from the already existing sources by different scholars about a study phenomenon (Bruce, 1994). The chief sources of documentary review were broadly classified into two groups namely, published sources and unpublished sources. The use of documentary sources is important in relating the study and its findings with other published and sometimes unpublished information. The information from secondary data would be collected by visiting the libraries in different institutions, internet for related data about the impact of managerial competence on financial performance of Microfinance institutions. Some of the documents would be reviewed before the field data collection exercise while some were picked during field data collection especially during interviews with key respondents and was to be used to enrich the study discussions. Documentary evidence analysis includes both primary and secondary sources of data that has a connection with corporate governance and financial performance of centenary bank staff (Mushemeza, 2009).
3.6 Data Collection Instruments
3.6.1 Questionnaires
The questionnaire was designed and administered to the targeted respondents. The questionnaire was semi structured in nature embracing both open and closed ended questions whereby they read and wrote besides ensuring confidentiality. It was administered to board members, managers, supervisors, administrators, and other bank staffs since the researcher needed immediate feedback to save time and solve language barrier and misinterpretation of questions by category. Questionnaire has close- ended questions to capture accurate quantitative data. A 5- point likert scale was used (5: Strongly agree, 4:agree. 3: neutral, 2: disagree, 1: strongly disagree) which allowed respondents to choose from a set of alternatives. The instrument is preferred because it was time saving as one spends little time in moving from one respondent to another during data collection (scattered respondents) unlike in interview method (Kakoza, 2002).
3.6.2 Interview Guides
Unstructured interview guides was used to gather data from key informants sampled in table 3.1 above. An unstructured interview was used because they are more flexible and permit probing of respondents in order to get in-depth detailed information (Amin, 2005).
3.6.3 Documents
Assortments of relevant official documents were reviewed. This was to augment information gathered using other research instruments.
3.7 Validity and Reliability
3.7.1 Validity
Validity refers to how accurately instruments capture data that gives meaningful inferences (Mugenda & Mugenda, 2003).Validity of the instrument was obtained through subjecting the data collection instrument to scrutiny from experts (academics and practitioners) to establish relevance of the questions/ items in instrument using the Content Validity Index (CVI).
CVI =     Number of items declared valid by judges
                       Total number of items

CVI= n/N
Where n= items that rated relevant
N= total number of items
CVI = 		34/45 = 0.755 (76%). 
Basheka, (2010), argues that for an instrument to be valid, the Content Validity Index should be within the accepted range of 0.5 to 1.  
3.7.2 Reliability
Reliability refers to the degree to which the instruments consistently measure whatever it is measuring (Amin 2005: 293). An instrument is reliable if it produces the same results whenever it is repeatedly used to measure trait or concept from the same respondents even by other researchers. To ensure reliability of research instruments, the interview guide was piloted on purposively selected respondents and where need arises; adjustments were made before the real research process. The questionnaires was pretested equally and revised if it becomes necessary before the research process begins. The Cronbach`s alpha-α test (Min=0.6) measured the scale reliability for internal consistency of the items. Reliability was obtained by using Cronbach’s coefficient test as stated in the following formula:

Where:
α 	= 	Alpha coefficient
 	= 	Variance of the total test
 = 	Sum of variances of the k questions in the instrument
K 	= 	Number of questions in the research instrument
Thus, from the formula above, the Cronbach alpha coefficients for the study variables were generated as shown in table 2 below. All the variables have coefficients greater than 0.6, which is the minimum expected coefficient.

Table 2:	Showing Cronbach’s Alpha Coefficient for the Study Variables

Study Variables	
Anchor	
Cronbach’s Alpha	

Board Size & Independence	5 Point	0.619	

Ownership Structure	5 Point	0.824	

Transparency & Disclosure	5 Point	
0.799	

Financial Performance	5 Point	0.866	
Source: Primary data                     

3.8 Procedure of Data Collection
After the research proposal was approved and passed together with the research data collection tools, the researcher sought permission from the head of department higher degrees, Uganda Management Institute addressed to the organization management where the study was conducted. The letter sought to introduce the researcher as a student of Uganda Management Institute. It explained what the research was about and the purpose of the study. It requested for any necessary assistance to be offered to the student. The researcher then contacted the various authorities to which the letter was addressed and then made appointments when the study could be carried out to enable proper planning. On the agreed dates, the researcher went to the organization, carried out the study and collected data. Interviews and questionnaires as data collection methods were administered to the selected centenary bank staff. The reasoning is to have that flow of order for purposes of easy comparison of data collecte`d from each of the respondent categories. A work plan on collection of data was shared with senior management to enable the researcher to easily interface with the respondents at the scheduled times. Relevant literature on corporate governance and financial performance was obtained from the annual reports and other existing literature.
3.9 Data Analysis
Collected data was compiled, sorted, edited and coded to have the required quality, accuracy and completeness. It was entered into the computer for analysis using Statistical Package for Social Sciences (SPSS 19). Correlations were used to measure the relationship between managerial competencies and financial performance in centenary bank. Regression analysis was used to explain how corporate governance affects financial performance of the centenary bank. The results were presented in descriptive formats such as narratives, tables, frequencies, percentages, graphs and citations.
3.9.1 Quantitative Data Analysis
Quantitative data was analyzed using SPSS (19) to derive relevant descriptive statistics (frequencies, pie chart and percentages) which were further be analyzed in order to arrive at relevant conclusions. It was presented using tables. The relationship between variables was computed using Pearson’s correlation coefficient.

3.9.2 Qualitative Data Analysis
This involved employing methods that are non-quantitative, and aimed at exploration of social relations, and would describe reality as experienced and presented by respondents. Its major purpose is to promote greater understanding of not just the way things are, but also why they are the way they are (Amin, 2005). Other qualitative methods included the pilot study, observation results, and relevant quotes from the respondents in addition to secondary data to compare with the primary data.
3.10 Measurements of the Research Variables 
Corporate governance was measured using the dimensions of board size & independence, ownership structure, and transparency & disclosure as adopted from Faizul et al., (2007).
Financial Performance was measured using profitability, return on investment, liquidity, capital adequacy, and asset quality.
These constructs were then put on a likert scale that will measure 1-5 point Likert scale as follows; (5 strongly agree, 4 agree, 3 not sure, 2 disagree, and 1 strongly disagree) as outlined by Kothari (2004).

CHAPTER FOUR
PRESENTATION, ANALYSIS AND INTERPRETATION OF RESULTS
4.0 Introduction
This chapter gives the presentation, analysis and interpretation of the results of the study. The trend of the discussion is focused on the relationship between and among the study variables in an attempt to answer the research questions. The variables of the study and their percentages are presented in tables, graphs and statistical tests to show the relationship between research variables. Descriptive statistics are presented later in the chapter to explore the results pertaining to the study based on the research objectives as stated below:
i)	To examine the relationship between board size & independence and financial performance of centenary bank;
ii)	To examine the relationship between ownership structure and financial performance of centenary bank;
iii)	To examine the relationship between transparency & disclosure and financial performance of centenary bank.
4.1 Response Rate
Frederick and Wiseman (2003) assert that a response rate has to be presented in research findings as they presented the validity of the study and failure to do so put the validity of the study findings into question. Response rate was frequently used to compare survey quality. The study targeted a sample of 195 respondents. A total of 175 questionnaires were distributed and 110 responses were received back, accounting for 63% response rate.  Amin (2005) argued that for a valid research to be conducted, a 50% response rate is adequate.
4.2 Demographic Characteristics of Respondents
This section examines the characteristics of the sample collected. This section gives the number of respondent, who responded to the study with regards to the characteristics of the respondents in relation to gender, age, education level, and work tenure of the respondents. Frequency tables were used for presentation and analysis of the sample characteristics. 
4.2.1 Gender of Respondents
Frequency table was used to present and analyse data on gender of the respondents. This is illustrated in table 3 below.

Table 3	Showing Frequency Distribution for Gender of the Respondents 
Gender 
	Frequency	Valid Percent	Cumulative Percent	
Valid	Male	43	39.1	39.1	
	Female	67	60.9	100	
	
Total	
110	
100.0		

Source: Primary data

From table 3 above, the findings indicate that majority of the respondents (61%) were female, while the male comprised 39% of the respondents who participated in the study. This implies that majority (61%) of the respondents were female meaning that the bank employees more female than male.

4.2.2 Age of Respondents
Frequency table was used to present and analyse data on the age group of the respondents. This is illustrated in table 4 below.

Table 4:	Showing Frequency Distribution for Age of the Respondents
Age 	Frequency	Valid Percent	Cumulative Percent	
Valid	18-30 years	42	38.2	38.2	
	31-40 years	34	30.9	69.1	
	41-50 years	32	29.1	98.2	
	> 50 years	2	1.8	100	
	
Total	
110	
100.0		

Source: Primary data

From table 4 above, the findings indicate that majority of the respondents (38%) were in the age bracket between 18 – 30 years, while the age bracket between 31 – 40 years comprised 31% of the respondents. Further analysis from the table above indicate that 29% of the respondents were in the age bracket between 41 – 50 years, while those who were above 50 years comprised of only 2% of the respondents.
4.2.3 Education Level of Respondents
Frequency table was used to present and analyse data on the education level of the respondents. This is illustrated in table 5 below;

Table 5	Showing Frequency Distribution for Education Level of Respondents 
Education Level	Frequency	Valid Percent	Cumulative Percent	
Valid	Masters	33	30.0	30.0	
	Post Graduate	8	7.3	37.3	
	Degree	65	59.1	96.4	
	Diploma	4	3.6	100.0	
	
Total	
110	
100.0		

Source: Primary data

From table 5 above, the finding indicate that majority (59%) of the respondents had attained university degree, while 30% had masters. Further analysis from the table above indicates that 7% of the respondents had postgraduate, while 4% had attained diploma level of education. This implies that majority (59%) had attained degree and had high level of education, which could enable them, understand the concept under study. 
4.2.4 Work Tenure 
Frequency table was used to present and analyse data on work tenure of the respondents. This is illustrated in table 6 below;

Table 6	Showing Frequency Distribution for Work Tenure 
Work Tenure	Frequency	Valid Percent	Cumulative Percent	
Valid	<1 year	6	5.5	5.5	
	1-3 years	45	40.9	46.4	
	3-5 years	29	26.4	72.8	
	>5 years	30	27.3	100.0	
	Total	110	100.0		

Source: Primary data

From table 6 above, majority of the respondents (41%) had worked for the bank for the period between 1 – 3 years, while 27% had worked for the bank for a period of more than 5 years. Further analysis from the table above indicate that 26% of the respondents had worked for the bank for the period between 3 – 5 years, while only 6% had worked for a period of less than 1 year. This implies that majority (41%) had worked for the period between 1 – 3 years, which is a long period for one to understand the operations of the bank.
4.3 Descriptive Statistics for the Study Variables 
Descriptive statistics were used to analyse the variables under study. Data on board size & independence, ownership structure, and transparency and disclosure and financial performance were collected based on the respondents’ understanding of commercial bank operations. The data was presented in table form below.
4.3.1 Descriptive Statistics for Board Size & Independence and Financial Performance
Descriptive statistics were used to analyse the impact of board independence on financial performance. Data on the impact of board independence on financial performance was collected based on the respondents’ understanding of commercial bank operations. The data was presented in table form below 7 below.

Table 7	Showing Descriptive Statistics for Board Size & Independence and Financial 
Performance 
Board Size and Independence 	Mean	Standard
Deviation	
The roles and responsibilities for any board member are well defined	4.15	.780	
The Board members undergo the process of performance appraisal 	2.95	1.207	
The Board is in charge of setting up strategic plans for the  bank	3.48	1.194	
The banks` objectives are fully functional
	4.05	.734	
Like any other institution is faced with the problem of meeting its intended targets	4.23	.616	
Centenary Bank  always met and achieved its objectives or set targets on time	4.12	.660	
The board is responsible for the banks daily operations
	4.04	.765	
Source: Primary data
Findings from Table 7 above indicates that the mean score of 4.15 is a clear indicator that many of the respondents agreed to the first item posed that the roles and responsibilities for any board member are well defined. The result meant that most staff understood the roles and duties that board members performed in relation to expected performance. Its implication on the other hand is that the board members perform defined job roles that drive the institution towards meeting its defined goal. This concurs with what one manager said, “The board members attend timely meetings and highlight how to run the institution strategically”. The researcher argues that for every position an employee holds, a relative job description exists meaning that staffs conform to the job duties hence staff understand what is expected of them in terms of input by the institution. 

Furthermore, from the finding in the table above, most respondents (n=52) disagreed that the board members undergo the process of performance appraisal.  The statistics means that the staffs still wonder who appraisal the board and they argue that this process or exercise is only compulsory to them and not the board. It implies that the only don’t have anything to mind about the appraisal exercise of the board members and their role is to only perform their duties and responsibilities a merit to performance. This is supplemented by an interviewee who said, “Since the top most board members manage and run the institution, there is no need to appraise them, and secondly the process followed helps identify the very best members”. As a researcher, I concur with the response because the board is at the apex and therefore there is no need to appraise them. 

Besides, further findings from the table above indicates that seventy percent of the respondents believed that the board is in charge of setting up strategic plans for the cententary bank meaning that the objectives of the bank are derived from the strategic goals set by the top management (board). Its implication is that when the goals are well set and followed by staff, the institution will always meet its mission. This is supported by one of the Board official during a face to face session who argued that  “Yes, the board members are in charge of setting long-term goals, plans for the institution, there is no compromise on that”. This is true because for any institution to survive there is always the element of strategic planning made by top management; these executives highlight the direction the organization takes. 
 
More so, from the table above, further findings showed that the standard deviation score of .734 coupled with a mean return of 4.05 were enough to show that majority of the respondents agreed that the cententary banks` objectives are fully functional., meaning that the staff are able to carry forward the institution through performing their duties and responsibilities need for its survival and this makes it a very good performer. In an interesting brief session with one Non-Executive member, she said, “Most of our staff performs as expected, by doing so they help in achieving of the objectives”. This is true because the overall objectives of any institution for example; centenary has been established by its management and communicated to its employees. Therefore, employees through their job descriptions perform what is expected of them hence achieving some of the set objectives.

Further analysis from the table above revealed that a mean response of 4.12 supported by standard deviation score of .660 clearly show that respondents agreed to the question posed that centenary always met and achieved its objectives or set targets on time. The two scores mean that a number of successful targets are realized by the staff through performing their work hence indicator of positive performance. This is supplemented by an interviewee who said, “Look here, for anyone to earn any benefits they have got to perform, which performance is subjected to the performance appraisal exercise therefore failure to achieve their targets means failed performance by the institution.”

Finally the board is responsible for the banks daily operations fetched a percent return of 86.3% show by a frequency return of (n=95 respondents) are enough to conclude that many of the respondents were in agreement with the statement. This is so because the board is informed about the day to day financial operations of the financial institution via reports produced by operational managers and middle managers. This is supported by an extract obtained doing an interview session with a supervisor who said that, “Operation or transactional level is key to the Institution, all elementary activities are supported at this level and therefore it’s the platform for the organization.” To the extent of the researcher`s understanding, the operation level is a important level where relationships among the internal support groups of an organization work to support a variety of core activities to an organization.
4.3.2 Descriptive Statistics for Ownership Structure and Financial Performance
Descriptive statistics were used to analyse the impact of ownership structure on financial performance. Data on the impact of ownership structure on financial performance was collected based on the respondents’ understanding of commercial bank operations. The data was presented in table form below 8 below.

Table 8	Showing Descriptive Statistics for Ownership Structure and Financial 
Performance 
Ownership Structure	Mean	Standard Deviation	
Licenses offered to centenary bank is issued through right channels 	2.50	1.171	
Centenary bank boast the economy positively for examples they create increased employment	2.90	1.285	
Centenary bank has written code of corporate governance to which foreign banks conform	3.28	1.142	
Centenary bank comply to the set corporate governance rules	2.84	1.105	
The code of governance covers specifications of rights of shareholders	3.16	1.080	
Centenary bank has created good operating environment and their performance is perfect	3.92	.978	

Source: Primary data

Findings from the table 8 above, shows that licenses offered to foreign banks are issued through right channels collected majority responses (n=71) these disagreed. Those who disagreed meant that they still feel the channels through which foreign banks got licenses were still in doubt; this affects the credibility of bank as a main financial institution because in case of failure or closure of any financial institution, centenary bank takes the blame alongside a lot of finances being to citizen lost. One respondent had this to say, “licensing is a very sensitive issue and when not handled well may explode.” The researcher agrees to the findings; because given factors like political interference, corruption and others. He sees loopholes in the entire process of licensing commercial institutions.

Further analysis from the table above indicates that increased employment scored a mean score of 2.9 a negative response indicator. This was so because respondents had a feeling those foreign banks were repatriating profits earned, according to them, the banks take financial resources to their owner countries, invading taxes and not reinvesting.  

Furthermore, majority of the respondents agreed (55.5%) that the bank has written code of corporate governance to which foreign banks conform. This is core for the management of most financial institutions because without such codes most members would exhibit excessive powers and eventually it may lead to misuse of say financial resources which may negatively affect performance, however on the positive note, following the codes means working within a given scope hence a merit to positive performance of such institutions. Additionally this can be supplemented by content captured during an interview with a non-executive member where He said, “There are codes of corporate governance acceptable to all board members.”

Besides, further analysis indicate that centenary bank complies to the set corporate governance rules scored high with a standard deviation score of 1.105 coupled with a mean score of 2.84. The scores show that divergences existed in answers that as were given. Furthermore,  results revealed that majority disagreed to the statement meaning that at times the bank does not comply to the rules hence it violates them and its implication is that as the rules are not followed correctly, there are likely to find obstacles or failures in achieving their set goals hence a negative indicator on performance. This relates with what one of the interviewee said about foreign ownership, “At times individuals use excessive powers to passes certain issues, a disadvantage” The code of governance covers specifications of rights of shareholders was another item posed to the respondents under foreign ownership. It fetched a frequency of (n=51) signifying a majority yes. The statistics means a combination of honor and rights are observable well while in operation and its implication is that employees, customers and other stakeholders are better to realize how their institutions are being run and how they are managing the institution. As an Executive member observes that, “Yes, different stakeholders interests are met”.

4.3.2 Descriptive Statistics for Transparency & Disclosure and Financial Performance
Descriptive statistics were used to analyse the impact of transparency & disclosure on financial performance. Data on the impact of transparency & disclosure on financial performance was collected based on the respondents’ understanding of commercial bank operations. The data was presented in table form below 9 below.

Table 9	Showing Descriptive Statistics for Transparency & Disclosure and Financial 
Performance 
Transparency & Disclosure	Mean	Standard
Deviation	
There is excellent work atmosphere of trust and respect at centenary bank	2.97	1.37	
Information about decisions taken at centenary bank is always relevant, comprehensive, and dependable	2.95	1.12	
Information about decisions taken at centenary bank is always understandable by all staff	2.36	0.90	
Information about decisions taken at centenary is freely available and shared amongst staff	2.59	1.09	
Centenary bank has an independent appointment board which deals with staff appointments	3.69	1.08	
All staff at centenary bank always follow the existing code of conduct set by the bank	3.26	1.02	
Management always ensures proper disclosure and actively communicates with staff	2.44	1.05	
All relevant operational and performance reports are always made available to staff	2.79	0.96	
The appointing authority have always selected qualified staff to work for centenary bank	3.79	1.23	
There has always been disclosure of top management activities to staff	2.50	1.03	
There has always been easy access to information about clients	3.82	0.97	

Source: Primary data

According to table 9 above, the respondents were in disagreement about excellent work atmosphere at centenary bank (mean 2.97), decision taken is always comprehensive and relevant (mean 2.95), about information taken by centenary bank being understandable to staff (mean 2.36),  information about decision taken being freely available and shared among staff (mean 2.59), also about management ensuring proper disclosure and communication with staff (mean 2.44), about all relevant operational and performance report always being made available (mean 2.79) , and also about disclosure of top management activities to staff (mean 2.50). However, they were not sure about centenary bank having an independent board that deals with staff appointments (mean 3.69), whether staff followed the code of conduct set by centenary bank (mean 3.26), whether staff appointed were qualified (mean 3.79), and whether there was easy access to information about clients (mean 3.82).
4.4 Correlation Analysis
The relationships between study variables are established by running a correlation analysis and since the study had relationship objectives, the relationship between the study variables of corporate governance components of board size & independence, ownership structure, and transparency & disclosure on financial performance were established using Pearson’s correlation. The results of the correlation analysis are indicated in table 10 below.

Table 10: 	Relationship between Study Variables
				
	1	2	3	4	5	

Corporate Governance (1)	1.000					

Board Size & Independence (2)							
		.334**					
			1.000				

Ownership Structure (3)							
		.493**	.455**				
				1.000			

Transparency & Disclosure (4)							
		.655**	.507**	.685**			
					1.000		

Financial Performance (5)						1.000	
		.578**	.695**	557**	.490**		
							
**. Correlation is significant at the 0.01 level (1-tailed).				

Source: Primary data
4.4.1 Relationship between Board Size & Independence and Financial Performance
Pearson’s correlation results from table 10 above, showed the relationship between board size & independence and financial performance. The Pearson coefficient (r = .695, p = 0.00<0.01) shows that the result is positive. The correlation results showed that board size & independence is a significant indicator of financial performance. This implied that the recommended board size and independence leads to better financial performance.

Hypothesis One:
Null hypothesis:
Ho: Board size & independence has no significant positive relationship with financial performance.

Alternate hypothesis:
H1: There is a significant positive relationship between board size & independence and financial performance.
α level: α = 0.01.

The hypothesis was tested using Pearson’s coefficient of rank correlation and the results are shown in table 10. It shows that there is a significant positive relationship between board size & independence and financial performance of centenary bank (r = .695, p = 0.00<0.01). Since the correlation was found to be significant, the null hypothesis (Ho) was rejected and the alternate hypothesis (H1) which recognizes the existence of significant relationship between board size & independence and financial performance was accepted as summarized in table 10.

4.4.2 Relationship between Ownership Structure and Financial Performance
Pearson’s correlation results from table 10 above, showed the relationship between ownership structure and financial performance. The Pearson coefficient (r = .557, p = 0.00<0.01) shows that the result is positive and, hence a positive association. The correlation results showed that ownership structure is a significant indicator of financial performance. This is therefore an indication that ownership structure of banks determines increases in financial performance.

Hypothesis Two:
Null hypothesis:
Ho: Ownership structure has no significant positive relationship with financial performance.

Alternate hypothesis:
H1: There is a significant positive relationship between ownership structure and financial performance.
α level: α = 0.01.

The hypothesis was tested using Pearson’s coefficient of rank correlation and the results are shown in table 10. It shows that there is a significant positive relationship between ownership structure and financial performance of centenary bank (r = .557, p = 0.00<0.01). Since the correlation was found to be significant, the null hypothesis (Ho) was rejected and the alternate hypothesis (H1) which recognizes the existence of significant relationship between ownership structure and financial performance was accepted as summarized in table 10.

4.4.3 Relationship between Transparency & Disclosure and Financial Performance
Pearson’s correlation results from table 10 above, showed the relationship between transparency & disclosure and financial performance. The Pearson coefficient (r = .490, p = 0.00<0.01) shows that the result is positive, hence a positive association. The correlation results showed that transparency & disclosure is a significant indicator of financial performance. This is therefore an indication that transparency & disclosure will greatly and positively influence financial performance of banks.

Hypothesis Three:
Null hypothesis:
Ho: Transparency & disclosure has no significant positive relationship with financial performance.

Alternate hypothesis:
H1: There is a significant positive relationship between transparency & disclosure and financial performance.
α level: α = 0.01.

The hypothesis was tested using Pearson’s coefficient of rank correlation and the results are shown in table 10. It shows that there is a significant positive relationship between transparency & disclosure and financial performance of centenary bank (r = .490, p = 0.00<0.01). Since the correlation was found to be significant, the null hypothesis (Ho) was rejected and the alternate hypothesis (H1) which recognizes the existence of significant relationship between transparency & disclosure and financial performance was accepted as summarized in table 10.
4.5 Regression Analysis
Multiple regression analysis was used to find out the influence of the independent variable on the dependent variable. The independent variable considered was corporate governance and dependent variable considered was financial performance. Table 11 below presents the regression model of the variables under study.

Table 11	Regression of Corporate Governance with Financial Performance 

Coefficients (a) 	

	Unstandardized Coefficients	Standardized Coefficients	t	Sig.	
Model	B	Std. Error	Beta

1	(Constant)	-.350	.714		-.490	.626	
	Corporate Governance	.622	.182	.416	3.409	.001	
a Dependent Variable: Financial Performance 	

	

	R	R Square	Adjusted R Square	Std. Error of the Estimate	
Model

					
1	.607(a)	.368	.446	.84321	

Source: Primary data 

The regression result showed that about 37% of the variations in financial performance of centenary bank are explained by corporate governance components of board size & independence, ownership structure, and transparency & disclosure. This means that about 55% of the variations in financial performance of centenary bank remain unexplained by this current study.

CHAPTER FIVE
SUMMARY, DISCUSSION, CONCLUSION AND RECOMMENDATIONS
5.0 Introduction
This chapter presents the summary of the study, discussion of the findings, conclusion and recommendation. The chapter also shows the limitations of the study and areas suggested for further research. The discussion and conclusions are drawn from the research findings obtained from primary and secondary data.
5.1 Summary of the Findings 
5.1.1 Board Size & Independence and Financial Performance
The first objective was to access whether board size & independence can affect financial performance of centenary bank. The overall findings on the first objective after combining all the variables studied using Pearson’s correlation approach (r = .695, p = < 0.001) showed that there was a significant and positive relationship between employee skills and performance.  
5.1.2 Ownership Structure and Financial Performance
The second objective was to investigate the impact of ownership structure on financial performance of centenary bank. The overall findings on the second objective using Pearson’s correlation approach showed that there was a positive and significant relationship between ownership structure and financial performance. The overall findings on the second objective using correlation results of (r = .557, p = 0.00<0.01) showed that there was a positive and significant relationship between ownership structure and financial performance. 

5.1.3 Transparency & Disclosure and Financial Performance
The third objective looked at how transparency & disclosure can impact on financial performance of centenary bank. The overall findings on the third objective using Pearson’s correlation approach showed that there was a positive and significant relationship between transparency & disclosure and financial performance. The overall findings on the second objective using correlation results of (r = .490, p = 0.00<0.01) showed that there was a positive and significant relationship between transparency & disclosure and financial performance.
5.2 Discussion of Research Findings
The discussion of the research findings was guided by the objectives of the study in comparison with the reviewed literature.
5.2.1 Board Size & Independence and Financial Performance
This study finding is in line with the arguments that corporate boards of directors play a central role in the corporate governance of modern companies, and hence understanding this relationship is very important to our understanding of corporate governance. Much of the public debate on board structure has centered on pressure for smaller board size. It is argued that although larger board size initially facilitates key board functions, there comes a point when larger boards suffer from coordination and communication problems and hence board effectiveness (and firm performance) declines (Lipton and Lorsch, 1992; and Jensen, 1993). 

Besides, According to (OECD, 1999), OECD principles call on businesses to recognize and safeguard stakeholders’ rights, including legitimate interests and information needs in line with improved performance. These principles call on boards to be truly accountable to shareowners and to take ultimate responsibility for their firm’s adherence to a high standard of corporate behavior and ethics. Effective corporate governance requires due diligence in rallying the support and commitment of the broad network of business stakeholders, including shareowners, employees, customers and communities. If stakeholders are adversely affected by a company’s actions, shareowner value will suffer. With the growth in pension and insurance funds and other institutional investors, shareowners are increasingly also company stakeholders, such as employees or customers. Therefore, these groups’ needs are increasingly interconnected.

Furthermore, Pfeffer (1972) views boards mainly as a mechanism for co-opting other external organizations and individuals, which is consistent with his view of firms as dependent on external resources. He hypothesizes that board composition in terms of insiders and outsiders, the number of directors with financial expertise, and the number of lawyers on boards depends on the firm’s need for creating links with the external environment (for example, the need to deal with regulators and banks).
5.2.2 Ownership Structure and Financial Performance
This study finding is in agreement with argument that structural and organizational differences between foreign and domestic banks may have implications for differences in cost structures and scale and scope economies. These differences result from different management strategies, differences of the markets they serve, knowledge of the local market, international synergies, and regulation.  A parent company of a foreign bank can provide its subsidiary with access to international markets, international diversification, and access to low-cost funds. These factors represent benefits for the foreign subsidiaries with cost advantages. However, a lack of familiarity of the foreign bank’s parent company with the nature and features of the local markets and difficulties with adaptation of home country strategy into the local markets may obstruct its development. A final remark is that foreign banks operating in a host market are subject to two processes: the first is due to their ownership by a foreign multinational bank and the second is due to their participation in the host banking system.

Furthermore, foreign ownership may have an impact on bank profitability due to a number of reasons: First, the capital brought in by foreign investors decrease fiscal costs of banks’ restructuring (Tang et al., 2000). Second, foreign banks may bring expertise in risk management and a better culture of corporate governance, rendering banks more efficient (Bonin et al., 2005). Third, foreign bank presence increases competition, driving domestic banks to cut costs and improve efficiency (Claessens et al., 2001). Finally, domestic banks have benefited from technological spillovers brought about by their foreign competitors. For these reasons, an examination of the impact of foreign ownership on banks performance is very important. Most of the efficiency studies of foreign-owned banks in developed countries find that the disadvantages outweigh the advantages. Foreign-owned banks are found to be less efficient than domestically-owned institutions with the possible exception of U.S. banks operating abroad (DeYoung, 1996), although a few studies find that foreign institutions are about equally efficient on average as domestic institutions (Vander Vennet1996). In contrast, some research suggest that the advantages of foreign ownership may outweigh the disadvantages in developing nations (Claessens, Demirgüç-Kunt, and Huizinga 2001) 

More so, other studies on the impact of foreign ownership on banks' performance in developing nations finds that foreign ownership and entry and fewer restrictions on these banks are associated with more competitive national banking systems (Claessens  et al (2004). Some also find positive effects of foreign ownership on business credit availability, (Klapper 2004). This may be due to the superior access to capital markets or technologies or to problems of the domestically owned institutions in these nations. Foreign ownership was found out to be of great significance to financial performance.  For example; the capital brought in by foreign investors decrease fiscal costs of banks’ restructuring, secondly, foreign banks may bring expertise in risk management and a better culture of corporate governance, rendering banks more efficient and finally foreign bank presence increases competition, driving domestic banks to cut costs and improve efficiency.
5.2.3 Transparency & Disclosure and Financial Performance
According to Finkelstein (2000), corruption is just one type of principal – agent inefficiency. This is important for developing countries where corruption is often endemic. In a country like the United States, however, where there is a strong respect for the rule of law and a very low level of corruption, one might think that the gains from more transparency would be smaller. But graft and corruption are only at one extreme end of the principal – agent problem. The principal – agent problem deals not only with agents who would outright steal from their principals when the principals are not looking, but also with agents who simply do not perform well because they lack an incentive to exert themselves. Therefore benefits of transparency are not limited to combating corruption, but extend to making all principal – agent relationships more efficient and effective.

Transparency is a process that: (1) requires us to disclose (2) substantively and truthfully (3) our performance (4) to those who are entitled to know (McTigue, 1990). In order for transparency to be effective, disclosure must be mandatory. Otherwise, the agent’s incentive would be to disclose her performance when it is convenient to her and to withhold information when it is not. To avoid an information asymmetry, a policy of transparency must compel an agent to disclose her performance 100 percent of the time. Similarly, disclosures must be full and truthful. Partial disclosure does not eliminate the potential for information asymmetries if inconvenient parts of one’s performance can be withheld (Penno, 1997). That disclosures must be truthful should go without saying; agents cannot be held accountable unless the information available to principal about the agent’s performance is accurate. Therefore, what transparency, properly understood, requires us to disclose is not merely our actions but our performance as well? Our performance is the result of our actions. In some cases, our actions and our performance are practically one and the same.  In most instances, however, evidence of actions or activity is not evidence of good performance.  Only if the principal can measure the agent’s performance and not simply monitor her activity can the agent be held accountable.

Transparency requires us to make substantive and truthful disclosures of our performance but only to those who are entitled to the information. As an employee, you may have an obligation to disclose your performance to your employer but not to your doctor or your mailman. There is a principal – agent relationship in the first case but not in the latter cases. A potential principal-agent relationship might also trigger an obligation to disclose (Penno, 1997). For example, a company’s management must disclose the corporation’s performance not only to its board of directors and shareholders but to potential shareholders as well.
5.3 Conclusions
5.3.1 Board Size & Independence and Financial Performance
Findings from the study showed that there was a strong relationship between board size & independence and financial performance. Effective corporate governance requires due diligence in rallying the support and commitment of the broad network of business stakeholders, including shareowners, employees, customers and communities. If stakeholders are adversely affected by a company’s actions, shareowner value will suffer.
5.3.2 Ownership Structure and Financial Performance
Finding from the study showed that there was a significant positive relationship between ownership structure and financial performance. The structural and organizational differences between foreign and domestic banks may have implications for differences in cost structures and scale and scope economies. These differences result from different management strategies, differences of the markets they serve, knowledge of the local market, international synergies, and regulation.  
5.3.3 Transparency & Disclosure and Financial Performance
The study finding indicated that there was a significant positive relationship between transparency & disclosure and financial performance. Transparency is a process that: (1) requires us to disclose (2) substantively and truthfully (3) our performance (4) to those who are entitled to know (McTigue, 1990). In order for transparency to be effective, disclosure must be mandatory. Otherwise, the agent’s incentive would be to disclose her performance when it is convenient to her and to withhold information when it is not. To avoid an information asymmetry, a policy of transparency must compel an agent to disclose her performance 100 percent of the time. Similarly, disclosures must be full and truthful. Partial disclosure does not eliminate the potential for information asymmetries if inconvenient parts of one’s performance can be withheld (Penno, 1997).

5.4 Recommendations
5.4.1 Board Size & Independence and Financial Performance
Based on the first objective, the bank should ensure that there is existence of effective board in order to ensure good level of corporate governance. Corporate governance requires due diligence in rallying the support and commitment of the broad network of business stakeholders, including shareowners, employees, customers and communities. 
5.4.2 Ownership Structure and Financial Performance
Furthermore, based on objective two, the bank should ensure that there is better management strategies adopted locally within in the bank in order to achieve better financial performance and compete favorably within the financial market with foreign banks.  
5.4.3 Transparency & Disclosure and Financial Performance
Considering objective three of the study, the bank should ensure that there is high level of transparency and disclosure must be mandatory. It should avoid information asymmetry that can affect its level of financial performance. There is need to eliminate the potential for information asymmetries if inconvenient parts of one’s performance can be withheld (Penno, 1997).
5.5 Limitations and Contributions of the Study
The major limitation to the study was that the scope was limited to only one commercial bank and also did not include other financial institutions in the financial market. Besides, the study was limited to corporate governance as the only predictor of financial performance.
5.6 Areas for Further Research
Further study could be done to investigate the impact of corporate governance on operational performance of commercial banks. Besides, the relationship between ownership structure and corporate performance could also be investigated. More so, board composition and financial performance could also be another area for further research.

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APPENDICES

APPENDIX I: INTERVIEW GUIDE
An interview guide for board members, middle managers on corporate governance and financial performance

I am Nuwamanya Abel a participant at Uganda Management Institute, doing a Masters degree in Public Administration (MPA). This interview guide is designed to study CORPORATE GOVERNANCE AND FINANCIAL PERFORMANCE OF CENTENARY BANK. You are kindly requested to answer all the questions. The information provided will helpful in bettering financial Institution performance in Centenary bank. Your response will be kept confidential.
Board Effectiveness
1)	What is the importance of looking at board responsibilities when considering corporate governance?
2)	Are the board members appraised??
3)	What are the board members involved in the strategic planning of the bank?
4)	What is the main source of problems to the bank?
5)	How do you minimize the problem facing the bank? 
6)	Are the Objectives met?
Board Size
1)	What is your view on the Board Structure?
2)	Is the board structure set according to rules and regulation, if yes comment?
3)	Who comprises the Centenary Bank corporate Structure?
4)	Comment about the costs spent about in the maintenance of the board size
5)	Comment about Centenary Bank is responsible for any failed achievements

Foreign Ownership
1)	What is your view on the upcoming of foreign banks?
2)	What your view about the existence of foreign banks in Uganda?
3)	Do you think foreign banks confirm to the codes of corporate governance; if so what is your take on this?
4)	Comment about the general operations of foreign Bank in Uganda
Financial Performance
1.	How do you describe financial Performance of Centenary Bank in terms of timeliness, efficiency and profitability
2.	What hinders timely and effective of Centenary Bank?
3.	What can be done to improve Performance of Centenary Bank?
4.	Comment about services offered by Banks
5.	Is there any provision for better financial performance? If so how do you go about it?
6.	What is your advice about bettering the entire financial performance of Centenary Bank?
Thank you so much for your time.

APPENDIX II: QUESTIONNAIRE

Background Information (Please tick as appropriate) 

Gender:    	       Male                          Female
What is your highest level of education achieved?   

Masters 	PGD		Degree		Diploma 		

Other: specify……

Indicate your Age Group:

Below 18 years                  18-30 years             31-40 years 

41-50 years                   over 50 years 
For how long have you worked with the CB?
1)	

< 1years
2)	

Between  1- 3 years		
3)	

> 3-5 years			
4)	

>5years	

Board Effectiveness
	SA
(5)	A
(4)	UD
(3)	D
(2)	SD
(1)	
The roles and responsibilities for any board member are well defined	5	4	3	2	1	
The Board members undergo the process of performance appraisal 	5	4	3	2	1	
The Board is in charge of setting up strategic plans for the centenary bank	5	4	3	2	1	
The cententary banks` objectives are fully functional	5	4	3	2	1	
Like any other Institution is faced with the problem of meeting its intended targets	5	4	3	2	1	
CB always met and achieved its objectives or set targets on time	5	4	3	2	1	
The board is responsible for the banks daily operations
	5	4	3	2	1	

Board Size	SA
(5)	A
(4)	UD
(3)	D
(2)	SD
(1)	
CB like any other firm has a board structure made up of known board members	5	4	3	2	1	
CB board is formed according to the rules and regulations that govern this institution	5	4	3	2	1	
The board is made up of Non executives and executives	5	4	3	2	1	
The number of individuals on the Board is confirms to defined rules and regulation 	5	4	3	2	1	
The number of board members is beneficial and increases expertise to the bank forward driving	5	4	3	2	1	
The Board is responsible for the forward driving of the Bank	5	4	3	2	1	
The decisions turned on the Board are representative of views of all board members	5	4	3	2	1	
CB is responsible for any failed achievements
	5	4	3	2	1	
Foreign Ownership	SA
(5)	A
(4)	UD
(3)	D
(2)	SD
(1)	
Licenses offered to foreign banks are issued through right channels 	5	4	3	2	1	
Foreign banks boast the economy positively for examples they create increased employment	5	4	3	2	1	
The Bank has written code of corporate governance to which foreign banks conform	5	4	3	2	1	
The Bank comply to the set corporate governance rules	5	4	3	2	1	
The code of governance covers specifications of rights of shareholders	5	4	3	2	1	
Foreign Banks have created good operating environment and their performance is perfect	5	4	3	2	1	
Financial Performance	SA
(5)	A
(4)	UD
(3)	D
(2)	SD
(1)	
Emerging of banks in the country boast the economy 	5	4	3	2	1	
All banks are able to compete favorably in the economy	5	4	3	2	1	
Foreign owned banks tend to perform better than local banks	5	4	3	2	1	
Banks offer a wide range of services to their clients	5	4	3	2	1	
The services are readily available and accessed by the correct clients	5	4	3	2	1	
The services are offered on time of are timely in nature	5	4	3	2	1	
Survival is a core for any financial institution	5	4	3	2	1	
Performance of the financial institutions is closely monitored 	5	4	3	2	1	
The bank releases reports i.e., quarterly, mid and annually to CB	5	4	3	2	1	
Bank releases reports on time	5	4	3	2	1	
The financial reports issue show good financial performance	5	4	3	2	1	
The reports reflect good earning within the bank	5	4	3	2	1	
There is satisfactory liquidity within the bank	5	4	3	2	1