Credit risk and bank interest rate spreads in Uganda: a case study of Stanbic Bank Ntungamo Branch
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Date
2017-06
Authors
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Publisher
Kampala International University.College of Economics and Management
Abstract
This study assessed the impact of credit risk on the interest rate spreads in Stanbic bank. It was
guided by three objectives including; examining the relationship between the loan security and
interest rates of the bank, to examine the effect of loan monitoring and control on the interest rates
of the bank and to examine the effect ofloan appraisal on the interest rates of the bank. The study
used quantitative research design. A sample of 30 respondents was selected including loan
officials, bank manager, accountant, internal auditor and customers from a population of 35. Both
questionnaire and interview guide data collection tools were used and data analysis was carried
out using a statistical package (SPSS) and their meanings were contextualized, interpreted and
organized according to their sources. Findings indicated that granting loans to friends and
relatives easily results to poor loan recovery and hence poor interest rate, banks use qualitative
loan assessment methods to make loan granting decisions and banks ensure sufficient collaterals.
The study recommended that banks like Stanbic bank limited should ensure that customers are
well sensitized about how to manage loans and when to get loans so as to avoid the credit risks
that might arise out of poor loan management.
Description
Research report submitted to the College of Economics and Management in partial fulfilment of the requirements for the award of bachelors degree in Business Administration of Kampala International University
Keywords
Credit, Risk, Bank, Interest rate