THE ROLE OF COMMERCIAL BANKS IN THE PERFORMANCE OF SMALL SCALE AND MEDIUM ENTREPRISES. A CASE OF EQUITY BANK.

TABLE OF CONTENTS

DECLARATION

APPROVAL

DEDICATION

ACKNOWLEDGEMENTS iv

TABLE OF CONTENTS

LIST OF TABLES ix

LIST OF FIGURES

LIST OF ABBREVIATIONS

ABSTRACT

CHAPTER ONE 1

INTRODUCTION 1

1 .0 Introduction 1

1.1 Background to the study 1

l.2Statement of the Problem 3

1.3 General objective of the study 5

1.3.1 Specific objectives of the study 5

1.4 Research questions 5

1.5 Scope of the study 6

1.5.1 Geographical scope; 6

1.5.2 Content scope .6

1.6 Significance of the Study 6

1.7 Definition of key terms 7

CHAPTER TWO 8

LITERATURE REVIEW 8

2.0 Introduction 8

2.1 The concept of commercial banks 8

2.2 Types of Loan Facilities offered by commercial banks 10

2.2,1 Short Term Loan’ 10

2.2.2 Medium Term Loan 10

2.2.3 Long Term Loaw 10

2.3 The concept of the small scale industry 11

2.4 Contribution of the Small Sector Industry to Uganda’s Economy 14

1.5 The Role of Banking sector in Financing Small Scale Enterprises 15

1.6 Challenges faced by Small Scale Enterprises in accessing Bank Credits from commercial Banks in Uganda 16

CHAPTER THREE 19

RESEARCH METHODOLOGY 19

Introduction’ 19

1 Research design 19

3.2Population of the study .19

3.3 Sample Size~ 19

3.4 Sampling procedure 20

3.5 Sources of data of data 20

3.6 Data Collection instruments 21

3.6.1 Questionnaire 21

3.6.2 Interview method 21

3.7 Validity and reliability of the research instruments 21

3.8 Data processing and analysis procedures 22

3.9 Anticipated limitations of the study 22

3.10 Ethical considerations 22

CHAPTER FOUR 23

PRESENTATION, ANALYSIS AND INTERPRETATION OF THE FINDINGS 23

1.0 Introduction: 23

Bio data of the respondents 23

The age of the respondents 23

The sex of the respondents 25

The marital status of the respondents 26

Educational Level of the Respondents 26

Access of bank credits by the respondents 28

4.3. Why the respondents borrowed from banks 28

4.4 How bank loans have improved small scale businesses 30

4.5 Problems Faced by small scale enterprises when acquiring bank loans 32

4.6 Problems Faced by commercial banks while giving out loans to customers 34

CHAPTER FIVE 37

SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 37

5. 0 Introduction 37

5.1 Summary of findings 37

5.2 conclusions 38

5.3 Recommendations of the study 39

5.4 Areas for further study 40

REFFERENCES 41

APPENDICES

Appendix I: Research Questionnaire 44

ABSTRACT 

This research report was written as a requirement for the partial fulfilment for the award of a bachelor ‘s degree of business administration of Kampala International University. This dissertation explores the role played by commercial banks in the performance of small scale enterprises. The study used equity bank as the case study. The objectives of this study were to establish the effect of bank credits to the performance of the small scale enterprises in Uganda, to establish the contribution of bank credits in revitalizing the small scale industry in Uganda, to establish the problem faced by commercial banks in financing small scale enterprises in Uganda and to find out the problems facing the small scale enterprises in obtaining loans from commercial banks. Survey research design was used during the study and data was collected by the use of research questionnaires. The research findings showed that commercial banks play a big role in the performance of small-scale enterprises in Uganda. The bank loans that are given by the banks not only serve to grow and expand small-scale businesses bait also to increase their stock capital in circumstances where there is a decrease. The other role that was identified was the improvement in the quality and quantities produced by a particular firm. Moreover, the research findings showed many small-scale enterprises and the banking institutions themselves grapple with a slot of challenges that hinder the process of credit creation. The problems that were identified by this study were the lack of collateral security. This 9roblem affects both the small-scale enterprises and the banks themselves. It is a big challenge that stops many small-scale businesses to acquire loans from banks The researcher recommended that banks harmonize the collateral securities and interest rates to make it easy for small scale businesses to also attain loans that may serve to improve on their performance