Factors affecting private sector credit in Uganda

Abstract

This study focuses on identifying and evaluating the factors affecting the private sector credit in Uganda. The objectives of the study were; to establish the relationship between interest rates and private sector credit; to investigate the relationship between inflation rates and private sector credit; to establish the relationship between exchange rates and private sector credit. The study used secondary data from Bank of Uganda and it was monthly data from 2007 to 2017. Regression analysis was done was done to explore the relationship between the dependent variable which was private sector credit and the independent variables which were exchange rates, interest rates and inflation rates. The study found that interest rates to commercial banks and inflation rates have no significant effect on the private sector credit well as the exchange rates had a positive significant effect on private sector credit. Therefore, the study recommends that policies to regulate the fluctuation of exchange rates be further strengthened in order to manage the impact that exchange rate increments have on PSC.