Abstract

Non-performing loans have been an issue that affects the performance of commercial banks across the globe. Using 
Agency theory to examine the influence of board accountability and Non-performing Loans of commercial banks 
in Western Uganda. A mixed method approach (Quantitative supported by Qualitative) was adopted. A sample of 
232 respondents was drawn from a population of 550 people using stratified, purposive, and simple random sampling 
approaches. 195 respondents were responsive from 3 commercial banks which yielded an 84.1% response rate. The 
hypotheses were tested and revealed significant positive associations between the study variables. 6 participants were 
purposively selected from 3 commercial banks and interviewed using interview guides. Using Nvivo software and 
Miles & Huberman (1994) - approaches, interview data was managed and analyzed which revealed that the 
respondents understood corporate governance practices and non-performing loans in terms of the Extent of board 
interference in loan processes and the board’s role in solving NPL issues. They concluded that having in place a 
well-established board of directors who are responsible and accountable to their duties and responsibilities is key in 
fighting non-performing loans of commercial banks and commercial banks should be very sensitive when instituting 
boards by selecting board members who can perform their duties with high level of integrity. This will reduce the 
level of board members involved and influence the loan processes by favouring themselves and their close friends 
and relatives which at times brings non-performing loans However, further studies should be conducted using factors 
that affect NPL where possible to tap salient issues from the respondents.