Financial Innovation in Tanzania: Opportunities and Challenges

Abstract

Worldwide financial innovations have been explained as among the greater ways of providing various advantages in financial sector. In Tanzania, financial innovation has transformed most traditional and conventional ways of business transaction and international relation between economies. Policy makers had high expectation about the prospect of financial sector which led to significant reforms including financial liberalization and the development of regulatory and supervisory frameworks. The paper review this trend and found that Financial innovation has brought many opportunities including increased menu of financial assets and liabilities to end users, the cost of financial intermediaries have fallen, risk management tools have become increasingly sophisticated and Tanzania have found new ways to mobilize domestic and international savings. However several challenges were discovered as hindering financial innovation including lack of capital, low level of technology, lack of supporting policies and risk creation. KEYWORLD: Financial Sector; Financial Innovations; Challenges; Opportunities.