The Impact Of Interest Rates On The Performance Of Financial Institutions In Uganda. A Case Study Of Kenya Commercial Bank-Kampala Road Branch

ABSTRACT

The research on "The impact of interest rates on the performance of financial institutions in Uganda with a case study of JINJA ROAD" was conducted research was conducted in Kenya Commercial Bank Limited (KCB)-JINJA ROAD, Uganda which was launched in May 2006 and immediately commenced

operation in Uganda. The research was guided by the objectives of the study which included; assessing the impact of the interest rates in KCB JINJA ROAD, establishing the factors considered when setting interest rates in KCB JINJA ROAD, and finding out the relationship between interest rates and performance

of KCB JINJA ROAD. The respondents consisted of local population especially; KCB loan officers, KCB CEOs, KCB debtors and the economists.

On the impact of the interest rates in KCB JINJA ROAD, the study revealed that; increased financial base, increased demand for loans, decreased number of bank customers, and increased number of bank defaulters were answers given by the respondents on the research question. On the factors considered

when setting interest rates in KCB JINJA ROAD, the findings revealed that; amount, maturity, economic conditions, and Other Financial Institution were the answers given by the respondents on the factors considered when setting interest rates in KCB. On the relationship between interest rates and performance of KCB JINJA ROAD, the findings revealed that there is a very

strong relationship between interest rates and the performance of financial institutions in KCB JINJA ROAD and that the bank cannot do without interest rates from loans. Conclusions  and recommendations were later made after interpreting and

analyzing data.

TABLE OF CONTENTS

Declaration .................................................................................................. .i

Approval ..................................................................................................... .ii

Dedication ................................................................................................. .iii

Acknowledgment ........................................................................................ .iv

Table of Contents ......................................................................................... v

List of acronyms ........................................................................................ viii

List of tables ............................................................................................... ix

List of figures .............................................................................................. x

Abstract ...................................................................................................... xi

CHAPTER ONE ............................................................................................ 1

INTRODUCTION ........................................................................................... 1

1.1 Background of the study ......................................................................... 1

1.2 Statement of the problem ........................................................................ 1

1.3 Purj::x)reofthestudy ..................................................................................................... 2

l.4Oqjed:ives of the study ................................................................................... 2

1.5 Research questions ................................................................................. 2

1.6 Scope of the study .................................................................................. 2

1.6.1 Geographical scope .............................................................................. 3

1.6.2 Content scope ..................................................................................... 3

1.6.3 Time scope .......................................................................................... 3

1. 7 Significance of the study ......................................................................... 3

1.8 Conceptual framework. ........................................................................... .4

CHAPTER TWO ............................................................................................ 5

LITERATURE REVIEW .................................................................................. 5

2.0 Introduction ........................................................................................... 5

2.1 Defining interest rates ............................................................................ 5

2.2 Functions of interest rates in the economy ............................................... 5