| dc.description.abstract | The study was undertaken to examine the effect of interest rates and financial performance of
commercial banks in Uganda. It was guided by the following objectives namely; to determine the
relationship between the interest rates and performance of commercial banks in Uganda, to
assess the interest rates variations on the financial performance of commercial banks in Uganda,
to determine how the rise of interest rates affect commercial banks in Uganda. The study was
guided by three theories that is Keynes’s liquidity preference theory which states that the supply
of money is determined by the monetary authority (the central bank) by the tending of
commercial banks and by the public preference for holding cash (were, kamau, sichei, kiptu
2013). Micro economic theory which assumes that growing the money supply in excess of real
growth causes interest rates to rise. This is also a result from the Harberger, (1963) model, the
Schumpeter economic theory which calls those fluctuations/cyclical processes in economic life
business cycle. Schumpeter shows the intermediary role of financial sector between those who
save and invest through a process referred to as credit creation by bank financing that leads to
economic growth and development. The study was guided by stratified random sampling case
study research design. The researcher used simple random sampling for the employees of Stanbic
Masaka Branch. The researcher selected 44 participants as the sample for the study. The study
found but that, there is a positive and moderate linear relationship between financial performance
and interest rates charged by commercial bank. The study supports the dynamic and constant
update of the credit policy guidelines it also found out that proper management of working
capital management components helps in reducing the liquidity risk of the firm and this highly
contributes in reducing the liquidity risk of the firm and thus mitigating financial losses that
might be attributed to lack of finances to take advantage of profitable investments. | en_US |
