Browsing by Author "WANALE NORAH NABUDO"

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    INTEREST RATES AND LOAN PERFORMANCE IN BRAC UGANDA, BUDUDA BRANCH
    (2024-10-23) WANALE NORAH NABUDO
    The study assessed the influence of interest rates on loan performance in Brac Uganda, Bududa Branch. The objectives of the study included: examining the influence of fixed interest rate on loan performance, finding out the effect of annual percentage rate on loan performance, and establishing the relationship between the prime rate and loan performance. To arrive at empirical results, the methodology used both qualitative and quantitative techniques, thus triangulation, to arrive at the level of loan performance in particular. A descriptive research design guided and informed the study. The research was carried out using mainly questionnaires. A sample of 278 respondents was arrived at based on Krejcie and Morgan's (1970) Sampling Frame out of the 1,001 targeted participants. The findings of this study were analyzed using SPSS v 20, and a regression was used to establish the relationships between interest rates and loan performance. The rigorous process of interpretation of data was simultaneously carried out, a process that enabled the study to answer the research questions. Study findings revealed that fixed interest rate positively influenced loan performance (β = .625), annual payment percentage significantly affected loan performance (β = .32.1), and the prime rate had a positive significant relationship with loan performance (β = .344). Therefore, as measures to improve loan performance at Brac, the researcher recommended that before loans are disbursed, there should be proper assessment and appraisal and the bank should uphold the continuous monitoring and evaluation of clients‘ businesses that have subscribed to the fixed interest loans. The study further recommended advising and providing information to clients on trending business practices on the market, which will help them meet their repayment needs. The bank should avoid over-financing prime rate borrowers because prime rate borrowers may seem safer due to their loyalty and yet in an actual sense, they sometimes take too long to clear their huge loans or fail. Finally and most importantly, the bank should institute electronic financial cards to track the loan statuses and the performance of clients and also, put in place independent community loan assessment teams. Further research can be done on the relationship between fixed interest rates and loan recovery; the factors affecting loan recovery in rural communities; and the role of prime interest rates on the timely recovery of loans. Key words: Interest rates, fixed interest rates, annual percentage rate, prime rate, and loan performance