EXCHANGE RATE AND BANK LOANS IN UGANDA A CASE OF CENTENARY RURAL DEVELOPMENT BANK

TABLE OF CONTENTS

DECLARATION I

APPROVAL Ii

ACKNOWLEDGEMENT v

TABLE OF CONTENTS vi

LIST OF TABLES ix

LIST OF FIGURES x

ABSTRACT Xi

ACRONYMS xii

CHAPTER ONE 1

1.1. Introduction 1

1 .2. Background to the study 1

1 .3. Statement of Problem 3

I .4. General Objective 4

1.5. SpecificObjectives 4

1 .6. Research Questions 4

1.7. Hypothesis 5

1 .8. Scope of the study 5

1.8.1. Contentscope 5

1.8.2. Time scope 5

1.8.3. Geographical Scope 5

1.9. Significance of the Study 5

CHAPTER TWO 7

LITERATURE REVIEW 7

2.1. Introduction .7

2.2. Theoretical Perspective 14

CHAPTER THREE 16

METHODOLOGY 16

3. I. Introduction 16

3.2. Research Design 16

3.3. Focus area of study 17

3.4. Target population 17

3.5. Research Instrument 17

3.6. Document review 18

3.7. interviews 18

3.8. Validity and Reliability of the instrument 19

3.9. Data Analysis 19

3.10. Procedure 20

3.1 1. Ethical considerations........ 20

3.12. Limitations of the study ............21

CHAPTER FOUR 22

PRESENTATION, ANALYSIS, AND INTERPRETATION OF DATA 22

4.1. Introduction............ 22

4.2. Level of lending by CERUDEB 2002-20 12 ..........................22

4.3. Changes in exchange rates (Us Dollar and British pound) from 2002-20 12 ....................26

4.4. Relationship between lending in CERUDEB and variations in exchange rates between 2002 -2012...... 32

CHAPTER FIVE .36

SUMMARY, CONCLUSION AND RECOMMENDATIONS 36

5.1. Introduction 36

5.2. Summary 36

5.3. Conclusion 37

5.4. Recommendations 38

5.5. Areas for further research 39

REFERENCES 40

APPENDICES 42

APPENDIX I: DATA SHEET (EXCHANGE RATES US DOLLAR) 42

APPENDIX~II: DATA SHEET (EXCHANGE RATES OF BRITISH POUND) 43

APPENDIX III: DATA SHEET (LENDING RATES) 44

APPENDiX IV: DATA ANALYSIS USING STATA 45

ABSTRACT 

This research set out to investigate the relationship between Exchange rate and Bank loans in Uganda for a period of eleven years from 2002 to 2012. The study employed the cross sectional research design since it basically examined secondary data over the above period; It was also a descriptive-correlation since it was interested in examining the relationship between the independent variables and the dependent variable. The Population of this study was the published and non published reports on the variables under study. The objectives were; to examine the changes in the lending rates, establish the changes in exchange rates (American dollar and British pound) and to determine relationship between exchange rates and lending rates from the period of 2002-2012 in centenary bank. The study found out that there has been a continuous increment in the rate at which CERUDEB has been giving out loans to its clients within the studied period since the rate grew from 7.1 in 2002 to 9.2 by 2007. The second objective of the study set out to establish the exchange rate. It was established that the lowest exchange rate of the dollar was experienced in 2002, followed by a gradual increase up to 2006. It also shows two peaks, one experienced in 2004 and the second one experienced in 2010 from which the exchange rate declined till 2012. The exchange rate for the British pound displays a more or less a linear relationship of exchange over time. The lowest having been experienced in 2002, then a gradual increase up to 2004 followed by a marked decline in 2005. From this time the exchange rate increased gradually till the time when the exchange rate reached its highest in 2009. Basing on the findings it was also established that exchange rate has got a significant effect on lending rate.