The market risk and financial performance of selected commercial banks in Uganda:
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Date
2006-10
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Kampala International University, College of Economics and Management
Abstract
This study was carried out to examine the relationship between interest rates, inflation
rate, exchange rate, income distribution and financial performance, in relation to customer
loans within commercial banks in Uganda. The researcher focused on the savings
mobilization by commercial banks in Uganda and the impact of macro-economic factors
on customer’s demand and deposits.
A longitudinal design was developed to compile secondary data from; Bank of Uganda
reports, Uganda Bureau of Statistics, World bank annual reports, Uganda Institute of
Bankers’ library, and Ministry of finance Publications, among others from 2001 — 2005.
The data was analyzed using the SPSS package and Pearson’s correlation Co-efficient,
which measured the strengths and direction between the independent and dependent
variables
The findings showed that due to the high risks commercial banks encounter in extending
loans to the private sector, there was a decline in retaliation of their assets over the five
years. The results showed a positive significant relationship between exchange rate,
interest rate, access to finance, and loans availed to customers between 2001 and 2005.
The results also showed a high relationship between the risks and financial performance of
the commercial banks.
The study concluded that high interest rates, exchange rates, lack of collateral securities
and inflation have a significant role in accessing loans. Commercial banks should
concentrate on these variables and other incentives to woe customer access to credit for
long term financing.
The study therefore recommended that for banks to avail credit facilities to their
customers, the banks should ensure that the customers have fixed assets and equity
securities.
Description
a thesis presented to the school of post graduate studies in partial fulfillment for the award of degree of masters of business administration of Kampala international university.
Keywords
market risk, financial performance, commercial banks