Determinants of Interest Rate Spreads in Uganda''s banking Sector

High Interest Rate Spreads, negatively affect the level of economic growth of a Country and the effeciency of the financial institutions. This is evidenced in the inverse relationship of the spreads and the level of GDP and the ratio of M2/GDP as proxies for economic growth and level of financial intermediation in this study respectively. Further, the direct relationship of the bank rate, treasury bill rates and the ratio of non performing loans to private sector credit in this study indicates the likelines of crowding out of private sector investment which also negatively affect the level of economic development of a Country. This is not "good news" for a developing country like Uganda. Measures should therefore, be taken to reduce the Interest Rate Spreads in Uganda.