Abstract: Globally, creation of credit by banks has had different influences on financial development and overall economic growth. People used to save their money to buy particular goods and services, but today they may get loans from commercial banks and receive the future cash flow right away. In this study, the researcher established the effect of credit creation in commercial banks on social economic welfare of the customers. Under this exploration the study focused on Credit Creation as an independent variable and Social Economic Welfare as a dependent variable. Credit Creation was measured in three dimensions which were Credit accessibility, Macro-Economic Conditions and Bank’s Credit Policies. While Social Economic Welfare was measured through Social economic class (Ubudehe), Ability to meet basic needs and Financial Savings. The study used descriptive research design and Correlation research design. The study population was 1916 while a sample size was 331. The researcher collected primary data which were collected using questionnaires.
On the first objective, coefficient on Credit accessibility was assessed to find out its effect on the social economic welfare and test the null hypothesis. The results revealed that Credit accessibility has significant effect on social economic welfare (β=0.282 t-statics= 11.791 P- value=0.000), the null hypothesis was rejected, and the researcher accepted the alternative hypothesis of the study basing on the fact that obtained P-value of 0.000 was less than the significance level of 0.05. Therefore, Credit accessibility has a significant effect on Social Economic welfare of commercial bank’s customer in Rwanda.
On the second objective, the Coefficient on Macro-Economic conditions was assessed to find out its effect on the social economic welfare and test the null hypothesis. The results revealed that (β=0.125 t-statics =5.212 P- value=0.001), hence the null hypothesis was rejected, and the researcher accepted the alternative hypothesis of the study basing on the fact that obtained P-value of 0.001 was less than the significance level of 0.05. On the Third objective, coefficient on Bank Credit Policies was assessed to find out its effect on the social economic welfare and test the null hypothesis. The findings revealed that (β=-0.253 t-statics =-3.492 P- value=0.001), hence the null hypothesis was rejected, and the researcher accepted the alternative hypothesis of the study basing on the fact that obtained P-value of 0.001 was less than the significance level of 0.05. Therefore, the study concludes Bank’s credit Policies has no significant effect on the social economic welfare of customers in Rwanda.
In conclusion, the findings from this study shed light on the significant role of credit creation on social economic welfare of the customers in commercial banks in Rwanda, case study Access bank Rwanda PLC. The research was conducted with a focus on three key aspects of credit creation: Credit accessibility, Macro-economic conditions, and Bank Credit policies. It is perceived that credit creation has played a vital role in promoting the social economic welfare of the customers as it enhances access to liquidity that is used in investments, acquiring personal needs.
Keywords: Credit Creation, commercial banks, social economic welfare, Bank Credit policies.
Title: EFFECT OF CREDIT CREATION IN COMMERCIAL BANKS ON SOCIAL ECONOMIC WELFARE OF THE CUSTOMERS IN RWANDA: CASE STUDY OF ACCESS BANK RWANDA PLC.
Author: NIZEYIMANA JEAN LUC
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
Vol. 11, Issue 2, October 2023 - March 2024
Page No: 285-295
Research Publish Journals
Website: www.researchpublish.com
Published Date: 26-January-2024
