Macroeconomic policies, currency risks, lending policies and banks’ competitiveness in Uganda

Abstract

This study focused on Macroeconomic Policies, Currency risks, Lending Policies and Banks’ Competitiveness in Uganda. The study assessed competitiveness in commercial banks their ability to remain competitive; in an unsupportive macro environment. The study further assessed how local banks lose ownership to foreign banks, offering micro financial services offered by microfinance institutions and unsatisfied customers, increasingly accusing banks of ripping them off while trying to keep businesses afloat in distress economy. The objectives of the study were to identify the relationship between Macroeconomic Policies and Banks’ Competitiveness, to find out the relationship between Macroeconomic Policies, Lending Policies and Banks’ Competitiveness, Currency risks, Lending Policies and Banks’ Competitiveness and the factor structure of Macroeconomic Policies, Currency risks, Lending Policies and Banks’ Competitiveness in Uganda. The study adopted the cross sectional and descriptive research using quantitative and qualitative approaches. The study population constituted 200 respondents; of which 185 were sampled. Purposive, stratified and random sampling design were used to collect information. Two data collection instruments of; research questionnaire and key format interview guide were used. 
The major findings of the study were as follows; there is significant positive relationships between Macroeconomic Policies, Currency risks, Lending Policies and Banks’ Competitiveness in Uganda generated using the Pearson (r) correlation coefficient. The regression analysis indicated that the variable predictors can account for 27.7% of the variance in Banks’ Competitiveness in Uganda and Macroeconomic Policies (Beta = .345, Sig. < .004) was the most influential at explaining Banks’ Competitiveness. It was concluded that; Macroeconomic Policies of fiscal and monetary policies, and their effects on; inflation, interest rates, exchange rates, employment rates and GDP are essential for the banks and their business community to monitor and understand in order to stay competitive in the country, amongst others. The study recommends that; banks need to proactively forecast and monitor government changes in monetary and fiscal policies and charge costs relatively to the loan facilities available to their customers, amongst others.