The bank interest rates and performance of business enterprises in Uganda: case study of Nakumatt supermarket, Kampala - Uganda
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Date
2013-07
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Kampala International University, College of Economics and Management
Abstract
The purpose of the study was to determine the impact of interest rates on the pe1formance of business enterprises in Uganda, the case study of Nakumatt Supermarket, Kampala, Uganda. The study was based three objectives which are;
1. To ascertain the effects of high interest rates on the pe1formance of business enterprises in Uganda.
11. To ascertain the effects of low interest rates on the performance of business enterprises in
Uganda.
111. To determine the different types of interest rates that affect business enterprises.
The researcher used purposive sampling to select the respondents from whom to obtain valid information about the study. This was through the issue of questionnaires and interview supplement tools while gathering the information.
Findings of the study revealed that there are two major forms of interest rates which include high interest rates and low interest rates. Within these, others are embedded; they include nominal interest rates, real interest rates, and market interest rates and default interest rates. However, from all of the above, market interest rates are most evident compared to others. Findings have revealed the above interest rates (high interest rates) to have the following impact on the performance of enterprises: Speculative investments rather productive activities, skyrocketing prices and wages.
More so, low interest rates have enhanced borrowing hence improved purchasing power of customers, and long-term plans and investment's for enterprises.
The researcher reco1mnends that the central bank should curb high interest rates by increasing the central bank rate which will help to reduce lending by commercial banks, hence curbing down the level of liquid cash from the public and lowering down interest rates. Also, the company should invest in projects like research and development to develop innovations within the market. It should also carry out processes and procedures to evaluate their performance in different economic conditions and be able to speculate in the near future.
Description
A Research Report Submitted to the College of Economics and Management Sciences in Partial Fulfillment of the Requirements for the Award of the Bachelors Degree in Business Administration, of Kampala International University
Keywords
Bank interest rates, Business enterprises, Uganda, Nakumatt supermarket, Kampala