The study is grounded in agency theory, which posits that conflicts of interest arise between principals (shareholders) and agents (managers) due to information asymmetry. Effective corporate governance, particularly board accountability, is essential to mitigate these conflicts and ensure prudent management of NPLs. The study also draws on the Commercial Loan Theory, Shiftability Theory, and Anticipated Income Theory to explain the relationship between interest rates, board accountability, and NPLs.

Empirical studies have consistently shown that board accountability plays a crucial role in managing NPLs. Boards with high accountability are less likely to make arbitrary changes to interest rates, adapting them based on borrower risk profiles and market conditions. Interest rates, in turn, have a direct impact on borrower repayment behavior, with higher rates increasing the likelihood of defaults and NPLs. Studies by Jiménez et al. (2014) and Chiaramonte et al. (2022) emphasize the importance of interest rates as a mediator between board decisions and loan performance.

The accountability of a bank’s board is critical in guiding its strategic direction and managing financial risks, particularly those tied to non-performing loans (NPLs). Boards that are well-informed and proactive play a central role in mitigating excessive credit risks and enforcing prudent lending policies ( Srinivasan et al., 2021). This responsibility requires that loans are approved only after a thorough assessment of borrowers, clear identification of associated risks, and transparent disclosure practices. These measures are essential in preventing the accumulation of high levels of NPLs. Board accountability can be strengthened through transparent decision-making, strict adherence to regulations, and effective loan supervision ( Ahmed & Malik, 2023), all of which contribute to lower NPL rates. In this context, the board acts as a safeguard, ensuring that loans are directed to creditworthy borrowers and reducing the likelihood of defaults. However, this relationship is further influenced by interest rates, which affect borrowing costs, borrower behavior, and repayment capacity, potentially altering the impact of board accountability on NPL outcomes.

Interest rates have a direct impact on the affordability of credit, which in turn influences borrower repayment behavior. When interest rates rise, borrowers who are already struggling to meet their repayment obligations may face increased financial pressure, leading to higher NPLs ( Nkusu, 2011). On the other hand, lower interest rates may encourage borrowing, temporarily increasing loan volumes but potentially amplifying credit risk if borrower assessment practices are not stringent. Research indicates that boards with high levels of accountability are less likely to make arbitrary adjustments to interest rates. Instead, they tailor rates to align with borrower risk profiles and prevailing market conditions. Jiménez et al. (2014) emphasize the importance of interest rates as a mediator between board decisions and loan performance, arguing that accountable boards can effectively prevent loan defaults by adopting responsible interest rate policies. This perspective is supported by empirical evidence showing a strong link between interest rates and borrower default risks, particularly in their impact on NPL levels in commercial banks.

The affordability of credit, which is directly influenced by interest rates, plays a critical role in shaping borrower behavior. If lending criteria are relaxed, high repayment burdens may increase credit risk, leading to higher NPL ratios. Conversely, low interest rates may stimulate excessive borrowing, further exacerbating credit risk. Boards with high accountability tend to make moderate interest rate adjustments that align with borrower risk profiles and economic conditions, thereby effectively managing NPLs ( Chiaramonte et al., 2022). This underscores the mediating role of interest rates in the relationship between board accountability and loan performance.

Accountable boards carefully evaluate interest rate policies to ensure sustainable loan terms for borrowers while maintaining profitability and loan stability. Aboagye and Otieku (2010) found that banks with accountable boards are more likely to adopt conservative interest rate strategies, which reduce the risk of defaults. This approach reflects a long-term perspective on financial stability, prioritizing sustainable lending over short-term gains. By proactively setting interest rates, these boards can maintain loan portfolios that are less susceptible to sudden defaults.

Regulatory bodies play a crucial role in administering interest rate guidelines to ensure equitable loan conditions for consumers. Accountable boards strategically set interest rates based on both the bank’s profitability and the need for a stable loan portfolio ( Hussain et al., 2023). Otieno and Karanja (2021) found that banks with accountable boards tend to adopt more conservative interest rate policies, minimizing the risk of loan defaults. This conservative approach highlights the importance of interest rates as a mediator between board accountability and NPLs. By prioritizing sustainable lending practices over short-term gains, boards can effectively manage NPL ratios.

Empirical evidence indicates that NPL levels are directly linked to the likelihood of borrower defaults caused by changes in interest rates. Recent data from emerging markets show that higher interest rates are often associated with increased NPL ratios due to higher borrowing burdens ( Lee et al., 2022). Accountable boards can mitigate this risk by adjusting interest rates in response to changing economic conditions, thereby enhancing their ability to manage NPLs. This approach underscores the critical role of interest rates in mediating the relationship between board accountability and loan performance ( Davies & Mills, 2023).

Research consistently demonstrates that changes in interest rates significantly impact borrower default risk, with NPL levels being directly influenced by these changes. Rising interest rates in emerging markets have been linked to higher NPL ratios, as evidenced by studies ( Nkusu, 2011; Beck et al., 2015). Regulatory bodies play a vital role in this context by conducting regular assessments of the impact of rate changes on banks’ loan portfolios and adjusting lending guidelines accordingly. These adjustments help borrowers manage repayments more effectively, reducing the risk of default and reinforcing the mediating role of interest rates between board accountability and NPL levels. Empirical evidence suggests that accountable boards can use interest rate adjustments as a protective measure, shielding banks from increased default risks.

The relationship between board accountability and NPLs is further influenced by sector-specific factors, particularly in industries sensitive to interest rate fluctuations, such as consumer lending and real estate. Boards with significant control in these sectors adjust interest rates to align with industry-specific risks, effectively managing default risks by setting appropriate rates for different borrower scenarios ( Nduta & Korir, 2022). This demonstrates the diverse role of interest rates in linking board accountability and NPLs across various banking sectors.

Interest rates are also influenced by macroeconomic factors such as inflation and GDP growth, which indirectly affect the mediation of board accountability and NPLs. During economic downturns, accountable boards may lower interest rates to encourage borrowing and maintain loan quality. Research by Louzis et al. (2012) shows that accountable boards are more likely to adjust interest rates during periods of economic instability to prevent spikes in NPLs. This highlights the role of interest rates as a buffer, enabling boards to manage risk and maintain loan performance even during challenging economic conditions.

The interplay between macroeconomic factors and interest rates further complicates the relationship between board accountability and NPLs. During recessions, accountable boards may reduce interest rates to support borrowers and maintain loan quality. Mukherjee and Singh (2020) found that accountable boards often implement rate adjustments to prevent NPL spikes during economic downturns. This flexibility allows interest rates to effectively moderate the relationship between board accountability and loan performance, ultimately reducing credit risk.

Strong corporate governance frameworks are essential for establishing interest rates that balance borrowing stability and loan profitability, thereby supporting board accountability. Effective governance enables boards to implement cost-effective and risk-free interest rate policies ( Palaniappan, 2023). Empirical evidence from Choudhury et al. (2021) shows that banks with strong governance structures experienced lower NPL ratios during financial stress, largely due to accountable boards’ prudent interest rate policies. This demonstrates how governance enhances the mediating role of interest rates in decision-making.

In sectors such as real estate and consumer lending, where borrowing is highly sensitive to interest rate fluctuations, accountable boards adjust rates to manage sector-specific risks. Beck et al. (2015) found that regulatory boards take proactive measures to mitigate default risks by setting sector-appropriate interest rates, highlighting the close relationship between interest rates, board accountability, and NPLs across different banking portfolios.

To strengthen board accountability, effective corporate governance ensures that boards have the authority to set interest rates that prioritize profitability while maintaining borrower stability. Increased transparency is essential in this process. Studies on banking governance show that well-designed governance systems empower boards to enforce interest rate policies that limit loan risk exposure ( Pathan, 2009). During financial crises, banks with strong governance systems experienced lower NPL ratios due to accountable boards’ prudent interest rate policies, as demonstrated by Beltratti and Stulz (2012). This evidence underscores how governance enhances the mediating impact of interest rates by promoting accountable decision-making at the board level.

In summary, the literature highlights the critical role of interest rates in mediating the relationship between board accountability and NPLs. Interest rates serve as a powerful tool, enabling boards to adjust lending practices based on market conditions, borrower characteristics, and economic cycles. Despite being a financial instrument, interest rates, when managed by accountable boards, can lead to lower NPLs compared to other approaches. This interconnected system of governance, interest rate policy, and loan performance offers strategies for reducing NPLs in commercial banks while emphasizing the need to align loan terms with economic and borrower-specific considerations to maintain stability. Based on the reviewed literature, the following hypothesis is proposed: H0: There is no mediating effect of interest rates on the relationship between board accountability and non-performing loans in commercial banks.

Reliability and validity tests were conducted to ensure the robustness of the SEM model. The Fornell and Larcker test confirmed discriminant validity, while the HTMT test indicated no issues with multicollinearity. Cronbach’s alpha values for all constructs exceeded 0.70, confirming internal consistency. Socio-demographic analysis revealed that 60% of respondents were male, and 40% were female. The majority of respondents (70%) had over 10 years of experience in the banking sector, ensuring that the data reflected the perspectives of seasoned professionals. Mediation analysis revealed that interest rates partially mediate the relationship between board accountability and NPLs (Beta = 0.286, t = 4.443). This suggests that while board accountability directly influences NPLs, interest rates play a significant role in shaping this relationship. The SEM model was reassessed to ensure the accuracy of the measurement model. Results confirmed that all factor loadings exceeded 0.70, and the model fit indices (NFI = 0.97, SRMR = 0.05) indicated a good fit. The findings reveal that most respondents agreed that NPLs are managed through transfers to third parties or special internal units (Mean = 4.19, SD = 0.796). Respondents also agreed that banks’ organizational structures for managing NPLs are diversified (Mean = 4.14, SD = 0.891). Board accountability was positively correlated with NPLs (r = 0.779, p < 0.05), indicating that higher accountability reduces NPLs as shown in Table 1 below.

The findings presented in Table 1 offer critical insights into respondents’ perceptions of the strategies and challenges associated with managing non-performing loans (NPLs) in commercial banks. The analysis reveals that a majority of respondents agreed that NPLs are primarily managed through transfers to third parties or specialized internal units, as indicated by a high mean score of 4.19 and a low standard deviation of 0.796. This suggests a strong consensus on the effectiveness of these methods, with responses closely clustered around the mean, reflecting consistency in perceptions.

Additionally, the study highlights the diversified organizational structures employed by banks to manage NPLs, as evidenced by a high mean score of 4.14 and a low standard deviation of 0.891. This indicates that banks adopt varied approaches to address NPLs, which may enhance their ability to recover impaired loans. Respondents also agreed that restructuring procedures often require a significant amount of time to achieve recovery, as shown by a high mean score of 4.10 and a low standard deviation of 0.752. This underscores the complexity and time-intensive nature of loan restructuring processes.

The findings further reveal that banks conduct thorough assessments of clients before disbursing loans, as reflected in a high mean score of 3.95 and a low standard deviation of 0.846. This demonstrates a strong commitment to risk management and due diligence in lending practices. Moreover, respondents noted that liquidations and restructurings differ in duration and in the proportion of loans backed by guarantees, as indicated by a high mean score of 3.95 and a low standard deviation of 0.846. This highlights the variability in recovery strategies and their reliance on collateral.

A significant proportion of respondents agreed that most loans are secured with valuable collateral, as confirmed by a low standard deviation of 0.577. This suggests that banks prioritize secured lending to mitigate credit risk. However, the study identifies key obstacles to efficient credit recovery, including backlogs in the courts and the complexity of legal procedures, as reflected in a high mean score of 3.90 and a standard deviation of 1.112. These challenges underscore the need for reforms in legal and judicial systems to facilitate faster resolution of NPLs.

The findings also emphasize the professionalism and integrity of bank management, as indicated by a high mean score of 3.86 and a low standard deviation of 0.943. This reflects confidence in the competence of bank leadership. Nevertheless, respondents highlighted the impact of professional fees and difficulties in coordinating with non-financial creditors, as shown by a high mean score of 3.81 and a standard deviation of 1.142. These factors contribute to the overall costs and complexities of managing NPLs.

Finally, the study reveals that the significant impact of managing NPLs on banks’ costs is further exacerbated by the inefficiency of legal procedures, as evidenced by a high mean score of 3.81 and a low standard deviation of 1.183. This highlights the interplay between legal frameworks and the financial burden of NPL management.

Overall, the results indicate a general agreement among respondents on the statements used to assess NPL management practices, as reflected in an overall mean score of 3.97 and a standard deviation of 0.909. These findings provide valuable insights into the strategies, challenges, and operational dynamics of managing NPLs in commercial banks, offering actionable recommendations for policymakers and practitioners to enhance recovery processes and reduce financial instability.

The findings presented in Table 2 offer critical insights into respondents’ perceptions of corporate governance practices within commercial banks. The analysis reveals that respondents generally agreed that banks disclose their corporate governance policies and guidelines, as evidenced by a high mean score of 3.95 and a low standard deviation of 0.901. This suggests a strong consensus on the transparency of governance frameworks within these institutions.

A key governance practice highlighted in the study is the separation of the roles of chairman and CEO, which is reflected in a high mean score of 3.90 and a low standard deviation of 0.87. This separation is widely regarded as a best practice in corporate governance, as it enhances board independence and oversight. Additionally, the findings indicate that all executive board members own shares in the bank, excluding options held, as shown by a high mean score of 3.90 and a low standard deviation of 0.923. Such alignment of executive interests with those of shareholders is essential for promoting accountability and long-term value creation.

The study also underscores the importance of ethical governance, with respondents confirming that banks disclose a code of ethics for senior executives. This is supported by a high mean score of 3.81 and a low standard deviation of 0.96. Such disclosures are critical for fostering ethical behavior and maintaining stakeholder trust. Furthermore, the findings reveal that the board or a designated committee is responsible for CEO succession planning, as indicated by a high mean score of 3.76 and a standard deviation of 1.068. This highlights the significance of structured leadership transitions in ensuring organizational stability.

Active participation in governance processes is another notable finding, with board members attending at least 75% of board meetings, as reflected in a high mean score of 3.71 and a low standard deviation of 0.883. This demonstrates a strong commitment to governance responsibilities. However, the study identifies areas where governance practices could be strengthened. For instance, respondents noted that banks have not adopted the recommendations of shareholder proposals, as indicated by a high mean score of 3.71 and a standard deviation of 1.078. This suggests a potential gap in responsiveness to shareholder concerns.

The findings also reveal that non-executive board members hold formal sessions without executives once a year, as shown by a high mean score of 3.67 and a standard deviation of 1.042. Such sessions are vital for ensuring independent oversight and addressing potential conflicts of interest. Nevertheless, the study highlights a limitation in governance practices, as board members are not subjected to annual elections by all shareholders, as reflected in a moderate mean score of 3.33 and a higher standard deviation of 1.325. This indicates room for enhancing shareholder engagement and accountability.

Lastly, respondents expressed neutrality regarding the ownership of shares by all non-executive board members, excluding options held, as shown by a moderate mean score of 3.14 and a standard deviation of 0.943. This suggests that the alignment of non-executive board members’ interests with those of shareholders may not be fully realized.

Overall, the results indicate a general agreement among respondents on the statements used to measure board accountability, as reflected in an overall mean score of 3.69 and a standard deviation of 0.999. These findings provide valuable insights into the strengths and weaknesses of corporate governance practices in commercial banks, offering actionable recommendations for policymakers, regulators, and practitioners to enhance governance frameworks and promote financial stability.

The analysis of the data presented in Table 3 provides significant insights into respondents’ perceptions of bank interest rates and associated practices. The findings reveal that bank interest rates are generally viewed as reasonable, as indicated by a high mean score of 4.19 and a low standard deviation of 0.908. This suggests a strong consensus among respondents regarding the fairness of the interest rates applied by banks.

Additionally, the study highlights effective communication practices within banks, particularly in keeping loan officers and credit clients well-informed. This is evidenced by a high mean score of 4.00 and a standard deviation of 1.116, demonstrating that supervisors consistently provide updates to stakeholders. Similarly, respondents confirmed that banks clearly communicate prevailing interest rates for various loan products before borrowers commit, as reflected in a mean score of 4.00 and a standard deviation of 1.158. Such transparency is essential for building trust and ensuring that borrowers make informed financial decisions.

The findings also emphasize the proactive measures taken by banks to facilitate loan repayment. Respondents agreed that banks structure payment schedules to align with repayment targets, as shown by a mean score of 3.95 and a low standard deviation of 0.901. However, the study identifies a notable challenge faced by credit clients: difficulties in meeting interest payment obligations. This is supported by a mean score of 3.95 and a standard deviation of 0.724, indicating that while repayment plans are well-organized, the burden of interest payments remains a significant issue for borrowers.

Recognition of timely loan repayments by banks was another key finding, with a mean score of 3.81 and a standard deviation of 0.960. This suggests that banks acknowledge and reward clients who adhere to repayment schedules, which can encourage responsible borrowing behavior. Furthermore, the study found that banks employ variable interest rates, as evidenced by a mean score of 3.67 and a standard deviation of 1.288. This variability aligns with risk-based pricing models commonly used in the banking sector.

The data also reveal that interest rates are not fixed throughout the loan period, as indicated by a mean score of 3.62 and a standard deviation of 1.177. This dynamic approach to pricing may reflect adjustments based on market conditions or changes in borrower risk profiles. However, the study identifies a gap in incorporating feedback from loan officers and credit clients regarding interest rate policies, as shown by a mean score of 3.62 and a standard deviation of 1.093. This highlights an opportunity for banks to adopt more inclusive decision-making processes.

Finally, the study found that credit clients are willing to share the benefits they derive from timely loan repayments, as confirmed by a mean score of 3.62 and a standard deviation of 1.177. This positive attitude toward repayment underscores the potential for fostering a culture of financial responsibility among borrowers.

Overall, the results indicate a general agreement among respondents on the statements used to assess interest rates, as reflected in an overall mean score of 3.84 and a standard deviation of 1.050. These findings offer valuable insights into stakeholder perceptions and experiences regarding interest rate practices in commercial banks, highlighting both strengths and areas for improvement.

From Table 4 above, the results show that there is strong positive relationship between board accountability and non-performing loans of commercial banks (r=0.779, P=0.00<0.05). the relationship is statistically significant at 0.05, meaning that when members of the board are accountable by performing their duties following the guiding principles and polices, the non-performing loans of commercial banks reduces and the reverse is true

The mediation analysis revealed that interest rates partially mediate the relationship between board accountability and NPLs (Beta = 0.286, t = 4.443). This suggests that while board accountability directly influences NPLs, interest rates play a significant role in shaping this relationship as shown in the Figure 1.

The results derived from Figure 1 highlight the critical role of oversight risk management (BA) in influencing interest rates (IR) and, subsequently, non-performing loans (NP) within the proposed model. The analysis reveals that indicators such as BA1 demonstrate the importance of oversight risk management, with a factor loading of 0.550 indicating a moderately strong correlation. This supports the reliability of BA1 as a key indicator of oversight risk management, underscoring its significance in the model.

In contrast, interest rates (IR) exhibit a weaker association with the latent variable strategic decision-making (Alpha), as evidenced by lower factor loadings ranging between 0.139 and 0.447. This suggests that Alpha’s influence on interest rates is less pronounced compared to oversight risk management (BA). Additionally, indicators such as NP1 through DP10, which measure non-performing loans (NP), show higher factor loadings, with NP2 displaying a negative loading of -0.284. This negative loading warrants further investigation to determine its appropriateness as a measure of non-performing loans, as it may indicate an inverse relationship or measurement anomalies.

The structural relationships within the model reveal significant causal pathways. Oversight risk management (BA) exhibits a strong positive loading of 0.811 on interest rates (IR), highlighting its substantial impact. However, strategic decision-making (Alpha) shows minimal direct influence on interest rates, suggesting that its role is secondary in this context. Furthermore, the path coefficient of 0.919 between interest rates (IR) and non-performing loans (NP) indicates a significant relationship, emphasizing the central role of interest rates in driving NP levels. This implies that improvements in oversight risk management (BA) could lead to higher interest rates, which may, in turn, exacerbate non-performing loans.

To evaluate the model’s validity, the analysis employed SmartPLS, beginning with the arrangement of latent variables and their corresponding indicators, followed by the establishment of pathways based on the network’s structure. The execution of the PLS Algorithm yielded path coefficients, R ² values, and model fit indices, including SRMR and NFI. A good model fit is typically indicated by NFI values exceeding 0.90. Bootstrapping was used to assess the significance of path coefficients, with an estimated chi-square value of 136.214, confirming that the model aligns well with the data and that its latent variables enhance the model’s explanatory power.

The findings underscore the centrality of oversight risk management (BA) in the model, while the moderate influence of strategic decision-making (Alpha) on interest rates suggests a more limited impact on non-performing loans (NP). These results highlight the importance of robust oversight mechanisms in managing interest rates and mitigating the risk of non-performing loans, offering valuable insights for policymakers and practitioners aiming to enhance financial stability.

Table 5 provides a detailed analysis of the correlations between latent variables, presenting key statistical measures such as original sample values, sample means, standard deviations (STDEV), t-statistics, and p-values. These metrics collectively assess the strength, consistency, and significance of the relationships within the dataset.

The correlation between strategic decision-making (BAb) and oversight risk management (BA) is notably strong, with an original sample correlation of 0.695 and a sample mean of 0.708. The low standard deviation of 0.027 indicates minimal variability across the sample, while the high t-statistic of 25.585 and a p-value of 0.000 confirm the statistical significance of this relationship. This robust correlation underscores the strong linkage between strategic decision-making and oversight risk management.

The relationship between oversight risk management (BA) and interest rates (IR) is even more pronounced, with an original sample correlation of 0.937 and a sample mean of 0.940. The exceptionally low standard deviation of 0.009 reflects high consistency across the sample. The t-statistic of 101.911 and a p-value of 0.000 further validate the statistical significance of this relationship, highlighting the substantial influence of oversight risk management on interest rates.

Similarly, the correlation between strategic decision-making (BAb) and interest rates (IR) is strong, with an original sample value of 0.745 and a sample mean of 0.754. The standard deviation of 0.027 indicates stability in this relationship, while the t-statistic of 27.112 and a p-value of 0.000 affirm its statistical significance. This suggests that strategic decision-making plays a significant role in shaping interest rates.

The relationship between non-performing loans (NP) and oversight risk management (BA) is also strong, with an original sample correlation of 0.859 and a sample mean of 0.865. The low standard deviation of 0.021 and the high t-statistic of 41.441, along with a p-value of 0.000, confirm the statistical significance of this relationship. This implies that effective oversight risk management is closely associated with lower levels of non-performing loans.

The correlation between non-performing loans (NP) and strategic decision-making (BAb) is similarly robust, with an original sample value of 0.750 and a sample mean of 0.756. Despite a slightly higher standard deviation of 0.032, the t-statistic of 23.724 and a p-value of 0.000 demonstrate the statistical significance of this relationship, emphasizing the role of strategic decision-making in mitigating non-performing loans.

Finally, the relationship between non-performing loans (NP) and interest rates (IR) is one of the strongest in the model, with an original sample correlation of 0.919 and a sample mean of 0.924. The very low standard deviation of 0.010 indicates exceptional consistency across the sample. The t-statistic of 92.601 and a p-value of 0.000 further reinforce the statistical significance of this relationship, suggesting that interest rates have a substantial and consistent impact on non-performing loans. The consistently high correlations, supported by significant t-statistics and low p-values, demonstrate the strong interconnections between strategic decision-making, oversight risk management, interest rates, and non-performing loans. These findings indicate that changes in one variable can significantly influence the others within the model.

The null hypothesis, which posited that interest rates do not mediate the relationship between board accountability and non-performing loans, is rejected. Instead, the results confirm that interest rates fully mediate this relationship. This implies that when board members effectively perform their duties in setting governance policies related to interest rates, non-performing loans are reduced, and vice versa. These findings align with Choudhury et al. (2021), who found that banks with strong governance frameworks experienced lower NPL ratios during periods of financial stress, largely due to the interest rate policies established by accountable boards.

The study highlights the critical role of governance in mediating interest rates and their impact on non-performing loans. By strengthening oversight risk management and strategic decision-making, banks can enhance their ability to set effective interest rate policies, thereby reducing non-performing loans and promoting financial stability. These insights offer valuable guidance for policymakers, regulators, and banking practitioners seeking to improve governance frameworks and mitigate the risks associated with non-performing loans.

Future studies should explore the impact of macroeconomic factors, such as inflation and GDP growth, on interest rates and NPLs. Additionally, comparative studies across different regions and countries could offer further insights into the role of corporate governance in managing NPLs.

The findings of this study have both theoretical and practical implications. Theoretically, the study contributes to agency theory by demonstrating how board accountability and interest rates interact to influence NPLs. Practically, the findings suggest that banks should adopt conservative interest rate policies and strengthen board accountability mechanisms to reduce NPLs and enhance financial stability.

This study has several limitations, including its focus on commercial banks in Western Uganda, which may limit the generalizability of the findings. Future studies should explore the relationship between board accountability, interest rates, and NPLs in other regions and sectors. Additionally, longitudinal studies could provide deeper insights into the causal relationships between these variables.