Effect of Financial Incentives on Financial Performance of Equity Bank Rwanda Limited

Abstract

The purpose of this study was to examine the effect of financial incentives on financial performance of Equity Bank Rwanda Ltd because it is believed that poor financial motivations affects performance of employees which in turn affects financial performance of organizations including Banking institutions. This research was achieved by use of three specific objectives namely; to examine the effect of Staff  loan on financial performance of Equity Bank Rwanda Ltd; to assess the effect of Profit Sharing on financial performance of Equity Bank Rwanda Ltd and to examine the effect of Bonus Pay affects financial performance of Equity Bank Rwanda Ltd. The target population of the study was 80 staffs of Equity Bank Rwanda Limited and a sample of 67 staff were purposively sampled. Both primary and secondary sources of data source were consulted by used of questionnaire and documentary analysis as a recommended data collection tools. Data was processed by use of SPSS program and analyzed by use of frequency, mean and standard deviation, and the results represented in table. In the findings it was established that Staff  loan, Profit Sharing and Bonus Pay greatly affects the financial performance of Equity Bank Rwanda inform of the Bank net profit, return on capital, and return on asset, equity and loan and Bank liquidity. The Table 14 gave the relationship between Financial incentives and Financial performance whereby the respondents  N is 67 and the significant level is 0.01, the results indicate that independent variable has positive high correlation to dependent variable equal to .682^** and the p-value is .000 which is less than 0.01. When p-value is less than significant level, therefore researchers concluded that variables are correlated and null hypothesis is rejected and remains with alternative hypothesis. This means that there is a significant relationship between financial incentives and financial performance. We can therefore conclude financial incentives greatly contribute to positive financial performance.