Foreign exchange risk management, human capital and performance of forex bureaus in Kampala.

Abstract

This main aim of this study was to empirically examine the relationship between foreign exchange risk management, human capital and financial performance of forex bureaus in Kampala. Drawn from literature, independent variables namely foreign exchange risk management and human capital were formulated to link each research question per relationship and joint effect on Performance. The research motivation was the unstable financial performance in sales volume and profitability of forex bureaus within Kampala. The cross sectional, correlational and descriptive study designs enabled the conceptual framework in the deliberate survey and eased a structured interview schedule for data collection using proportionate stratified and purposive sampling on 103 firms. This caused a response rate of 90.3 percent (n=93). Statistical Package for Social Scientist (SPSS) Version 17 tested for descriptive, rotated component, correlation, multiple regression and Variance analysis Findings show significant factor inter-correlations between dimensions. Pearson`s correlation coefficient (r) revealed that Foreign Exchange Risk Management proved a stronger positive association and predictor effect than the moderate Human Capital with regard to Financial Performance. In addition, a multiple regression test showed a joint positive impact of 16.6 percent by both human capital and foreign exchange risk management to predict the financial performance. This significantly proved the conceptual and research literature. Management insights and improvements on the indirect role of human capital and foreign exchange risk management can boost competitive advantage to better financial performance. Forex bureaus should endeavor procedural reforms in operations, in-house training, optimal forex strategies, networking and needs assessment for firm specific human capital. Key words: Foreign Exchange Risk Management, Human Capital, Financial Performance.