Interest Rate and Profitabilty of Small and Medium Enterprises in Kabale Municipality, Kabale District Uganda

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dc.contributor.authorJulius Gumisiriza
dc.date.accessioned2025-10-13T10:13:43Z
dc.date.available2025-10-13T10:13:43Z
dc.date.issued2025-10-06
dc.descriptionUNDER GRADUATE RESEARCH
dc.description.abstractThe purpose of the study was aimed at assessing the effect of interest rate charged by commercial institutions on profitability and growth of SMEs in Kabale municipality Kabale District, Uganda. The specific objectives of this study were; to examine the effect of commercial bank lending rates on the net profit margin of small and medium enterprises in Kabale Municipality, to assess the relationship between the Central Bank Rate and the return on assets of small and medium enterprises in Kabale Municipality and to analyze the effects of short-term and long-term interest rates on the return on equity of small and medium enterprises in Kabale Municipality. A sample size of 80 respondents from the selected small-scale enterprises in Kabale Municipality, Kabale district. Based on the study findings, the following conclusions were drawn in line with the research objectives; The majority of respondents indicated that the cost of borrowing limits their profit potential, the findings revealed that 45% of the respondents linked the Central Bank Rate (CBR) to increased commercial lending rates, which indirectly reduce the return on assets (ROA) for SMEs and the respondents reported that high short-term interest rates reduce return on equity (ROE) due to higher financial obligations. Based on the above conclusions, the following recommendations were made; Commercial banks should consider introducing SME-specific loan products with lower interest rates, the Bank of Uganda should adopt a more flexible monetary policy that balances inflation control with economic growth objectives. Lower and more stable CBR levels will help commercial banks offer loans at competitive rates. Monetary policy should be inclusive to support SME productivity.
dc.identifier.urihttps://hdl.handle.net/20.500.12311/2995
dc.language.isoen
dc.publisherUganda Christian University
dc.titleInterest Rate and Profitabilty of Small and Medium Enterprises in Kabale Municipality, Kabale District Uganda

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