As I noted earlier, the more stringent are bank regulations, the more difficult it will be for banks to incur risks (i.e. by investing in risky assets) and this in turn will impede the growth of bank lending and stifle the overall dynamism of the banking system.
Does the performance of the banking system since the enactment of the  9  Financial Institutions Act, 2004 offer any evidence that bank lending has been stifled by over regulation? In September 2004, the total loans of the banking system amounted to 37 percent of its deposits. At that time the Ugandan banking system was still a relatively low intermediation banking system.