The article investigates what factors affect interest rates in Uganda's banking sector. By analyzing data from 24 banks over 2008-2016, the researchers found that liquidity, equity capital, market power, and reserve requirements increase interest rates. On the other hand, operational efficiency, lending out ratio, concentration, public sector borrowing, and private sector credit decrease interest rates. Credit risk, however, does not impact interest rates. The study suggests that banks should focus on equity mobilization and efficient operations to lower costs, while the government should use borrowed funds wisely to boost economic growth.