Commercial Banking and Financial Development in Uganda Case Study of Bank of Uganda

Abstract

This study investigated the impact of commercial banking and financial development in Uganda. It aimed to discover why the commercial banking sector in Uganda has continued to grow over the years yet the financial development levels of the country still remain low.

The study adopted the correlational study design with quantitative and qualitative research techniques. A total sample size of 36 respondents was used. Self-administered questionnaires and a face to face interview were used to collect data. Data was coded and later processed and analyzed and presented using means and standard deviation. Literature review based on the study objectives was done.

From the study it was revealed that increased commercial bank deposits encouraged financial development through provision of a more diversified and stable funding base and potentially contributed to the stability of the financial system. Increased commercial bank branch networks promoted financial development by increasing access to financial services. It was also exposed that increased loans issued led to financial development through financing production, distribution, investment in businesses, and enabled them to properly allocate and invest much of society’s savings.

Finally it was recommended that commercial banks should build more branches, ATMs and mobile banking services and mostly in rural areas in order to make people benefit from their savings and simplify money transfer. It was also recommended that commercial banks should set low loan interest rates in order to encourage people to acquire more loans and also advise them on profitable ways of investing the loans taken. This will increase investment thus growth and development in the country

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