Increased Foreign Commercial Banks and Performance of Domestic Commercial Banks in Uganda

Abstract

This paper focuses on the effect of increased foreign commercial banks on performance of domestic commercial banks in Uganda over the period 2000-2011. Descriptive statistics were used to analyze banks’ performance trends over the period of twelve years, divided into two periods: 2000 to 2006 being; pre- increased period of foreign commercial banks while 2007 to 2011 being increased foreign commercial banks periods. The study found that, increased foreign commercial banks had a positive effect on deposits mobilization; liquidity position; Interest income and Non-interest income; technical know-how, which included among others, risk management and eventually improvement in profits of domestic commercial banks. Policy implications emerged is that foreign commercial banks are major players in commercial banking sector development, therefore, monetary policy makers and regulatory authorities should attract many foreign commercial banks to join Uganda’s commercial banking sector.