Interest rates on magnitude of agricultural and mortgage loans in Uganda (1994-2012)
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Date
2013-05
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Kampala International University, College of Economics and Management
Abstract
The study carried on the relationship between interest rates on loans sizes disbursed specifically agricultural loans and mortgage loans obtained the data from bank of Uganda website. Interest rates was measured as percentage weighted lending rates, mortgage loans as percentage mortgage loans of billions of shillings, agricultural loans as percentage agricultural loans of billions of shillings during the 1994-201 2 period. The objectives were to establish the trend of interest rates, agricultural loans and mortgage loans over time. It
intended to work out the relationship between interest rates on agricultural and mortgage loans. By the aid of time series graphs i.e. correlogram, the interest rates was irregular/not stationary over time, agricultural loans exhibited an inverse hyperbolic pattern whereas mortgage loans showed an exponential growth pattern. A scatter plot gave a graphical relationship between agricultural loans and interest rates which revealed a very small relationship with points widely scattered and also the relationship between mortgage loans
and interest rates was shown to be weak though positive. Correlation analysis was conducted for the relationship between agricultural loans and interest rates where the correlation coefficient was negative, mortgage loans and interest rates showed a positive coefficient though weak. In addition regression analysis was conducted where agricultural loans and mortgage loans were regressed on interest rates and the resuhs
showed no strong relationships for the respective loans. The hypothesis of the study was that no significant relationship existed between loans and interest rates and this was accepted as the null hypothesis at 0.05 level of significance using i-test and one tailed test concluded that there is no significant relationship between the respective loans and interest rates. Therefore, recommendations were made that. in order to improve loans accessibility to the Ugandan population, the various stakeholders should emphasize other factors such as
sensitization or awareness, proper appraisal of collateral, investments and savings etc while regulating interest rates on mortgage loans
Description
Research report submitted to the school of economics and applied statistics in partial fulfillment for the requirement of the award of a Bachelor’s Degree in Economics and applied Statistics of Kampala international
University
Keywords
Interest rates, mortgage loans, Uganda