Effect of interest rates on borrowing in commercial banks in Uganda: a case study of centenary rural development bank, Arua branch
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Date
2017-07
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Kampala International University, College of Economics and Management
Abstract
The research was carried out to study the effect of interest rates ceiling on loan borrowing in Uganda's commercial banks with specific regard to Centenary Rural Development Bank, analyzing the impact of interest rates fluctuation (rising and falling interest rates) on' loan repayment in Uganda's commercial Bank~ a case study ()f Centenary Rural Development Bank and analyzing the effects of interest rate 011 the supply of loans. The study established that most Centenary Bank customers were aware of the i1ifluence interest rates have on micro-credits in regard to business performance. It was established that the provision of loans to entrepreneurs has a great impact on the businesses performance. This partly explains unenthusiastic regard of the management of Uganda Micro Finance Institutions to their improvements, in the credit terms to their clients' entrepreneurs. 17ie study also established the most important cause of poor business performance and collapse as being amongst others the high interest rates, limited amount lent, lack of entrepreneurship skills and high taxes. The researcher recommends that Centenary Bank should endeavor to conduct some entrepreneurship skills and loan servicing short training workshops if it's to meet its objectives. It should also revise its terms of lending and reduce on the interest rates to enable entrepreneurs make profits and be able to service their loans as this will lead to the growth and continuity of their businesses.
Description
A research report submitted to the College of Economics and Management Sciences in partial fulfillment of the requirement for the Award of a Bachelors Degree in Business Administration of Kampala International University Uganda
Keywords
interest rates, Borrowing, Commercial banks, Uganda