Assessment of factors leading to dispersions in interest rates in Uganda’s banking sector. Case study Bank of Uganda

Abstract

This study seeks to assess the factors leading to interest rate dispersions within Uganda’s banking sector, with a specific focus on the Bank of Uganda as a case study. Despite various monetary and regulatory interventions aimed at promoting stability and efficiency, significant variations in lending and deposit rates persist across commercial banks. Such dispersions affect credit accessibility, investment decisions, and overall economic growth. The research will explore key determinants including monetary policy frameworks, inflation trends, credit risk, operational costs, market competition, and regulatory compliance requirements. Both qualitative and quantitative approaches will be employed, drawing on secondary data from the Bank of Uganda reports, financial statements of selected commercial banks, and relevant policy documents, complemented by interviews with key stakeholders. The findings are expected to highlight the underlying drivers of interest rate variations and provide insights for policymakers and financial institutions to enhance interest rate stability, improve financial intermediation, and support sustainable economic development in Uganda.