Macroeconomic factors associated with the growth of the private sector credit in Uganda
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The study focused on the macroeconomic factors influencing the growth of the domestic private sector credit in Uganda. Specifically, the study sought to examine the trend of domestic private sector credit across different time periods in Uganda; factors influencing growth in the private sector; and to examine the existing association between domestic private credit and the selected macroeconomic variables in Uganda. The study employed the explanatory research design which sought to determine the correlation between the domestic private credit and the selected macroeconomic variables. The diagnostics test in this study showed that the distribution for the residuals of private sector credit were not normally distributed, were homoscedastic and serially correlated but the serial correlation was corrected using the Cochrane-Orcutt regression. The study found out that central bank rate, Consumer Price Index, exchange rate and inflation and bank specific factors such as money in circulation, the lending rate and deposit are associated with the private sector credit growth. In regard to the growth of private sector, the government through Bank of Uganda need to boost investments in the economy by lowering the central bank rate to as low as below 11 percent, set up restrictive monetary policy to reduce inflation rate in the economy in a bid to allow borrowers access funds at lower interest rates.