Factors affecting commercial banks penetration in the population of Uganda: a case study of Lugazi town council

Abstract

This study examined the factors affecting commercial bank penetration in the population of Uganda. Despite the increased number of commercial banks and their increased stability, the penetration of commercial banking services in terms of the number of commercial bank accounts remained very low at only 16%. The study identified the cost of banking, the competition from non commercial bank financial intermediaries and the level of public trust in the commercial banks as the leading study objectives. The study used primary data gathered from Lugazi Town council in Buikwe District. This data was analyzed using SPSS to find the different relationships that existed between the dependent and independent variables. The cost of banking was judged vey high by majority of respondents, the non commercial banks are attracting more customers compared to commercial banks in semi urban area and the level of trust for commercial banks is still very low. The study recommended that commercial banks be facilitated with a Commercial bank support center to enable them reach people in schools, villages and private sector more cheaply. It also recommended that commercial banks be influenced to copy the processes used by NCBFIs. The government needs to come up with a deliberate move to improve public confidence in commercial banks through more sensitization of the masses.