Abstract: The study looks at the effect of foreign portfolio investment on the financial performance of commercial banks in Rwanda a case of BPR commercial bank. The specific objectives of the study were: To examine foreign portfolio investment in shares on the financial performance of Banque populaire du Rwanda, to analyze foreign portfolio investment policy on the financial performance of banque populaire du Rwanda. The research design that was used in the study was Descriptive Research Design. The researcher focused on describing and explaining the effect of foreign portfolio investment on the financial performance of commercial banks in Rwanda a case of BPR commercial bank using questionnaires. A sample size of 93 respondents from finance, credit, cooperate, retail department and active clients where selected in this study. For a comprehensive study, the researcher adopted a cross-sectional survey design to capture information in relation with objectives of the study. In January 2008, following 33 years of experience in the Rwandan financial sector, UBPR was transformed from a cooperative bank into a commercial bank: Banque Populaire du Rwanda S.A. In June 2008, Rabobank, the Dutch cooperative banking conglomerate, acquired 35 equivalent to frw 4,877,581,000. In July 2012, Visa Inc. certified the bank to issue visa-branded debit and credit cards. The study is based on the assertion that foreign portfolio investment has a significant contribution on the profitability of the banking sector in Rwanda as well as bank populaire du Rwanda (BPR).
The above objectives were achieved by using qualitative and quantitative data collection and analysis methods. The instruments that were used are questionnaires and documentary review. Data was analyzed using statistical analysis like regression analysis and SPSS.
The findings of the study engaged employees from various departments in BPR main Branch and active clients. From the regression analysis used, investment in shares has impacted positively bank populaire du Rwanda as it is evidenced by (P 0.001 < P 0.05) statistically significant. This finding matches with that of Van, H.& James, C ( 1990) that Financial globalization in developing countries is mainly favored by the availability of cheap labor and the fact that, return on capital is relatively High, Credit facilities of Banque populaire du Rwanda have been significant (P 0.031< 0.05).This finding is also emphasized by Gallagher(2007) that Commercial banks and other financial institutions that exist primarily to lend money to business, to individuals, governments, and other entities but the bulk of their profits come from business loans. Cultivating good loan customers and using credit-risk analysis to ensure that borrowers are credit worthy. The researcher also gave out the proper recommendation on effectiveness of foreign portfolio investment So that the Government of Rwanda can be able to take more serious the responsibility of creating an enabling environment for effective, value- adding foreign portfolio investment in the banking sector. From the research findings, From the research findings, the literature research and the results of the analysis of the responses to this study, the following conclusions were reached. Since 2008, with Rabobank foreign investment, BPR has taken huge strides in developing IT systems and improving internal organization. This has enabled the bank to automate its network, introduce innovative new products such as mobile banking and expand the ATM network beyond the main cities – all vital ingredients in improving access to financial services in both urban and rural areas.
Keywords: Foreign portfolio investment, financial performance.
Title: The Effect of Foreign Portfolio Investment on the Financial Performance of Commercial Banks in Rwanda
Author: Frederick Kamali, Jaya Shukla, Tobbias Olweny
International Journal of Thesis Projects and Dissertations (IJTPD)
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