The Effect of Loan Interest Rates On the Performance of Small Scale Businesses in Makindye Division Kampala

TABLE OF CONTENTS

DECLARATION .1

APPROVAL

DEDICATION Hi

ACKNOWLEDGEMENT iv

TABLE OF CONTENTS v

LIST OF TABLES ix

LIST OF ACRONYMS x

ABSTRACT

CHAPTER ONE 1

INTRODUCTION

1.1 Background of the study

1.2 Statement of the Problem 2

1.3 Objectives of the study 4

1.3.1 General objective 4

1.3.2 Specific Objectives 4

1.4 Research Questions 4

1.5 Scope of the study 4

1.5.1 Content scope 4

1.5.2 Geographical scope 5

1.5.3 Time scope 5

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1.6 Significance of the Study .5

I .7 Conceptual frame work 6

CHAPTER TWO 8

LITERATURE REVIEW 8

2.0 Introduction 8

2.1 Interest Rates 8

2.1 .1 Types of Interest Rates c

2.1.2 Theories on interest rates 9

2.2 Small Scale Business 10

2.3 The effect of high interest rates on the performance of small businesses 11

2.4 Challenges affecting small scale businesses 13

2.5 Relationship between loan interest rates and performance of small scale businesses 18

CHAPTER THREE 19

RESEARCH METHODOLOGY 19

3.0 Introduction 19

3.1 Research design 19

3.2 Study Population 19

3.3 Sampling method and sample size 20

3.3.1 Sampling method 20

3.3.2 Sample size 20

3.4 Data collection techniques 21

vi

3.4.1 QLIestio~l~aires ~ 21

3.4.2 Interview method 22

3.4.3 Observation 22

3.5 Data sources 23

3.5.! Primary Data 23

3.5.2 Secondary data 23

3.6 Data processing, presentation and analysis 23

3.7 Data Validity and Reliability 23

3.7.1 Validity 24

3.7.2 Reliability 24

3.8 Limitations to the study 24

CHAPTER FOUR 26

PRESENTATION, INTERPRETATION AND DISCUSSION OF FINDINGS 26

4.0 Introduction 26

4.! Background characteristics of the respondent 26

4.1.1 Age of respondents 26

4.1.2 Gender of respondents 27

4.1.3 Marital status 28

4.1.4 Respondents’ level of education attained 29

4.1.5 Types of businesses undertaken by respondents 30

4.1.6 Time period respondents have been in SSB undertakings 32

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4.2 Sources of finance 558’s~se~33

4.2.1 The effect of interest rates on the performance of small scale businesses 34

4.3 Challenges to the SSBs 35

4.4 The relationship between loan interest rates and the performance of small scale

businesses 37

CHAPTER FIVE 39

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION 39

5.0 Introduction 39

5.1 Summary of the study 39

5.1.1 The effect of interest rates on the performance of small scale businesses 39

5.1.2 Challenges facing SSBs 40

5.1.3 The relationship between loan interest rates and the performance of SSB’s 41

5.2 Conclusion 41

5.3 Recommendations of the study 42

5.3.1 The effect of interest rates on the performance of small scale businesses 42

5.3.2 Challenges facing SSBs 42

5.3.3 The relationship between loan interest rates and the performance of SSB’s 43

5.4 Areas for further Research 44