Banks In Tanzania Research Articles

Factors Affecting Employees Performance in The New Commercial Banks in Tanzania

Employees’ performance in commercial banks plays a significant role to increase competitive advantage. However, so far the study for employeesʹ performance in the new commercial bank branches has not yet been thoroughly conducted. The study was be carried out with the objective to assess the role of goal setting on employee’s performance, to assess the effect of employee involvement on employees performance, contribution of interpersonal relationship on employee performance and assess the extend which teamwork affect employee performance. The study was conducted in Mbeya city on three selected new commercial bank branches namely Access, Akiba and Equity banks. The study sample was drawn from a population of 170 employees obtained from Access Bank, Akiba Bank and Equity Bank. Questionnaire we administered to 118 respondents, but only 100 respondents were able to answer and return the questionnaires. SPSS Version 16 Software was used in analysis the data obtained from respondents, Pearson correlation and Multiple linear regression analyzed data to determine the relationship between the independent variables and dependent variable. The findings revealed to have a positive significant relationship between goals setting, employee relationship, interpersonal relationship and employee performance, while team work has no significant relationship. The study recommended that banks should involve employees in decision making, set challenging yet realistic goals and reward employees in accordance to their performance (use performance based salary system).

Risk Management Practices in Agricultural Financing in Developing Countries: Experience from Selected Commercial Banks in Tanzania

This study examines risk management tools to mitigate agricultural financing risks. The study analyses risks that lenders face, tools for managing the risks and the correlation between agricultural lending and risk mitigation tools. The used data come from a sample of 55 employees from three selected banks, which is analysed using frequency tables and Chi-square. The findings show that banks face production risks in terms of variability in outputs due to drought and diseases. Tools for managing the risks include collateral, appraisal techniques, diversification of agricultural activities, group liability, guarantee/cash deposits, loan structuring and warehouse receipts. The Chi-square test finds a correlation between risk mitigation tools and agricultural lending; hence, mitigation tools enhance lending to the agricultural sector. Therefore, to manage agricultural risks, banks should deploy these tools optimally. Additionally, exposing farmers to free market practices will enable them to cover costs of their operations, and to repay the loans.

Gender and Perceived Usefulness of e-HRM Technologies. A Case of the Bankers’ Experience in Tanzania

This study investigates the impact of gender differences on the perceived usefulness of e-HRM technologies, using 158 observations from a survey conducted in one of the commercial banks in Tanzania. The descriptive statistics show that the e-HRM technologies in the bank have not been perceived as useful. With the T-Test, it has been found out that men perceive the e-HRM technologies more useful compared to women. The paper urges the promoters of e-HRM technologies in organizations to better understand the ways in which the use of such technologies can be enhanced to their employees, particularly women. The study proposes further research on e-HRM and gender, particularly on the impact of e-HRM technologies on spending, time saving, and errors.

Dividend Policy for Commercial Banks in Tanzania: Controlling for Random and Specific Effects

The study examines the determining factors of dividend policy of the regulated Tanzania’s commercial banks, covering throughout 2009 to 2018. The variables under the study include dividend policy, firm size, liquidity, profitability and leverage. Data were collected from the audited financial statements, yearly reports, and proceedings from Annual General Meetings of the regulated commercial banks. The study examines Six (6) commercial banks in Tanzania. For inferential analysis, fixed and random effect panel data methods were employed. An ideal model was determined by using Hausman Test. Results revealed that while liquidity takes a negative yet minor effect in dividend pay-out of commercial banks in Tanzania, profitability and leverage revealed a positive and significant effect on the dividend pay-out. Furthermore, firm size determines dividend pay-out ratio since investors perceive big banks making profits are having greater chance to pay high dividends compared to small firms. This makes people invest in the banks expecting higher dividend yields in the future. The study findings will help the directors and management teams of banking sector to arrive at appropriate dividend policy. Moreover, the findings are useful to guide investors decisions. This research paper contributes to the commercial banks dividend policy body of knowledge. It also covers the gap in the prevailing literatures by concentrating on the issue of commercial banks in emerging markets specifically Tanzania. Keywords: Dividend policy, Tanzania, Emerging market, Commercial banks, Determinants DOI: 10.7176/RJFA/13-4-02 Publication date: February 28 th 2022

Perceived benefits of E-Banking and its Relationship on Banking Performance in Tanzania

Not so long ago, numerous banks in Tanzania have commenced using of digital technologies to influence business transactions; however, there is little understanding on the perceived benefits of these products on the performance of the banks. The study scrutinized the perceived benefits from using E-Banking and its relationship on banking performance in Tanzania taking CRDB and NMB banks as the case study. The specific objectives of the research were three and they include;(i) look on benefits of internet banking and its effect on banking performance, (ii) to assess the perceived benefits of mobile banking and how it impacts the banking performance and (iii) to determine the perceived benefits of ATM services and how it impacts on banking performance. The study adopted a quantitative research design whereby a questionnaire was distributed to 352 banks customers in Mwanza region in an attempt to arrive to a larger sample of respondents. A simple random sampling technique was used in this study so as to allow an equal chance of participants to fill up in the questionnaire and to reduce the elements of bias. The regression results on the overall model showed that the model accounted for adjusted R2 value of 51.3% of the variance explained by the indicator; and the F-statistic of 124.391 which was significant as p = .000. With respect to individual variables, the results of the study brought out forward that the benefits of internet banking were positively related to banks performance although the effect was moderate. Similarly, ATM teller machines and mobile banking had positive and significant effects on the banking performance. In the end it was recommended for commercial banks to improve awareness to customers on some of the e-banking product like internet banking, in addition the commercial banks are supposed to maximize the number of e-banking product so as to minimize congestion on banking premises, and to place banking facilities to various locations to ease access by customers.

FINANCIAL DEVELOPMENT AND TAX REVENUE IN TANZANIA: ANALYZE THE IMPACT OF FINANCIAL DEPTH ON TAX REVENUE

The purpose of this research was to consider the influence of financial development on Tanzania’s tax revenue. To accomplish the intent of this study, the main specific objective was concerned about the effect of financial depth on tax revenue in Tanzania. Design/methodology: This study adopted quantitative approach and time series as research design, this study was conducted in Tanzania. Because of the accessibility of the data for the time of 1996-2020.The annual time series data for the Tanzanian financial development and tax revenue were obtained from secondary sources which include the World Development Indicators (WDI) and Tanzania Revenue Authority (TRA). The method was employed to make the estimation is the Dynamic Ordinary Least Square (DOLS). Findings: The financial characteristics were considered to be relevant tax revenue parameters based on the study’s aims. As a consequence, the examination of the estimation findings revealed that financial depth had a beneficial influence on increasing tax revenue in Tanzania. As a result, this paper recommends that the government place a greater emphasis on financial development, as it may be a vital instrument for increasing tax revenue for social welfare, poverty reduction, and macroeconomic stability. The Bank of Tanzania has maintained its monetary policy stance, which aims to increase lending to the private sector to encourage economic activity.

The Relationship between Credit Risk and Financial Performance: Evidence from Commercial Banks in Tanzania

This research study purposed to determine the relationships between credit risks and the performance of commercial banks in Tanzania. Generally, the study aimed to establish the relationship between credit risk and financial performance in Tanzanian Banks. Specifically, to determine if the long-run relationship between credit risk and performance existed and investigated if credit risk and financial performance existed with a causal relationship in Tanzanian Banks. The research collected secondary data samples of 15 commercial banks in Tanzania from 2005-2019. This study adopted an explanatory approach to fulfil the above objectives. Both fixed and random effects models were engaged to determine the relationship. Hausman Test executed to determine the appropriate model. In the model, NPLR, LLPR, CAR, and BAS were used as the credit risk proxies, while return on asset (ROA) was used as the dependent variable. The findings reveal that the credit risk has both negative and positive relationships with the proxies used. The performance was inversely significant with NPLR and negatively insignificant with LLPR, while positively significant with CAR and positively insignificant with LBAS. The study concluded that the credit risk proxies, i.e., there was a significant relationship between NPLR and CAR with the commercial banks’ performance in Tanzania. Furthermore, the researchers concluded that the long-run relationship existed on the variables in the study, while granger causality existed in all variables except LLPR, i.e., Credit risk proxies except LLPR can granger cause the performance of commercial banks while the granger causality reveals no causal relationship among independent variables themselves. The study recommended that commercial banks in Tanzania should put more emphasis on handling credit risk and management of capital adequacy so as to have better financial performance.

Analysis of the Factors Affecting Bank Profitability: Evidence of Tanzania Commercial Banks

Only a successful and consistent banking sector can play the role of financial intermediary in the economy properly. As an intermediary in the modern economy, the bank must be profitable. The general aim of this study focuses on analyzing the factors that influence the profitability of private and public commercial banks in Tanzania. By the use of annual time series internal and external data for the period 2013 to 2019, and a quantitative approach methodology using GMM technique analysis of the impact of the selected determinants was made. The results from bank-internal variables comprised of four statistically significant variables which are capital adequacy, asset quality, loan composition, and cost efficiency while the rest is insignificant. Likewise, the macro-economic determining factors (growth domestic product (GDP) and inflation rate) were found to be non-significant. The empirical results have shown that profitability is more explained by bank-specific determinants that are directly controlled by the management than the macroeconomic factor variables which are beyond the reach of management control.

Real Estate-Backed Mortgages and Alternative Recovery Techniques: Evidence from Selected Banks in Tanzania

Inefficiencies accompanying foreclosures in recovering outstanding debts of real estate-backed mortgages have necessitated banks and other mortgage lenders to opt for alternative recovery techniques. Extant studies have focused much on the application of workouts mainly in developed economies (which are characterized by well-established real estate and financial markets) with less attention from emerging economies. This study aimed at exploring how banks in Tanzania apply alternative recovery techniques in real estate-backed mortgages. A qualitative approach was used to collect the data from multiple commercial banks in Tanzania. Interviews, annual reports, and government documents were used to triangulate the information. Findings revealed that different forms of workouts are preferred. The most preferred technique was mortgage modification, followed by mortgage refinancing. Other workout techniques such as forbearance, transfer of debt to a new borrower and short sale are minimally applied. Likewise, the banks were found applying the scare-tactics to enforce the customers do all they can to clear their debts before considering the use of the workouts. The study recommends that to facilitate optimal workouts, all stakeholders including the government, the bank systems, borrowers, and real property professionals must jointly cooperate for mutual benefits. The study proposed that further research could explore the fraudulent practice of borrowers that limit operationalization of workouts. Moreover, an investigation on whether borrowers’ benefit by changing terms of their repayment could be made. Finally, further studies are needed to investigate whether there is heterogeneity in the application of workouts between commercial and residential mortgage with a view to establishing whether borrowers’ default intentionally or not.

ASSESSING THE ADOPTION OF MOBILE BANKING SYSTEMS AMONG CUSTOMERS: A CASE OF TANZANIA FINANCIAL INSTITUTIONS

Banks are seemed to be one of the business that are really interested in a system which provide a better service to its customers effectively and efficiently. Mobile banking through an application is a recent technological innovation with enormous potential to improve the banking experience of retail bank customers and to streamline the banks’ operations. However, the successful implementation of mobile banking application (app) fundamentally depends on how much customers are fully motivated to adopt it. In fact, mobile banking adoption is in development stage of its growth in Tanzania. The study examines how user adoption of mobile banking services in financial institution through practices and challenges. The study is descriptive in nature and the convenience sampling units were used. The total sample size was 200 individuals including staff members of service providers and customers from commercial banks in Tanzania. The findings indicate that transaction costs, online theft, stranded platforms, network bottleneck, user perception and network providers’ security is not guaranteed. The findings contribute to the debate around technological innovation and transforming the banking industry. Also, they have policy implications with regard to the user-need approach to mobile banking services and network providers

SERVICE PERFORMANCE AND CUSTOMER SATISFACTION AS ANTECEDENTS OF CORPORATE REPUTATION: A COMPARATIVE ANALYSIS BETWEEN LOCAL AND FOREIGN BANKS IN TANZANIA

The competitiveness of commercial banks is of vital importance for a developing country that is striving to enhance the standard of living of its citizens by ensuring an expansion of banking services. This study compared service performance and customer satisfaction as antecedents of corporate reputation between foreign and local banks in Tanzania. The study had a sample size of 380 respondents who were the customers of these banks. The structural equation modelling was carried out so as to examine the interrelationships of the constructs and how the findings can be inferred on the entire population. Chi-square statistical values, Incremental Fit Index, the Tucker-Lewis Fit Index, the Comparative Fit Index, the Parsimony Normed Fit Index and the Root Mean Square Error Approximation were applied to examine the models’ fit. While the mean values were applied to compare customers’ perceptions of service performance, customer satisfaction and corporate reputation between local and foreign banks. The main findings from the study indicate that, service performance levels were perceived relatively positively; customer satisfaction on corporate reputation was slightly stronger for the foreign banks than the local banks and there are very strong positive relationships between service performance and customer satisfaction in the Tanzanian banking industry. The study recommends that managers of the banks need to understand that customers’ perceptions on the banks’ service performance have a significant influence on the perceived banks' reputation

EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON FIRMS’ ECONOMIC PERFORMANCE: IMPLICATIONS FOR BANKING SECTOR IN TANZANIA

 For decades, commercial firms have been providing aids in the form of Corporate Social Responsibility (CSR) and such aids have been used as one of the key determinants to firms’ economic performance. At different moments, these firms believed that such aids contributed heavily to positive returns of such firms. However, there is a great debate among scholars on the influence of CSR on firms’ performance. The existing strand of literature provides inconclusive findings and thus, little is known on the matter in Tanzanian context especially in the banking sector. The objective of this study was to examine the influence of CSR on the performance of registered banks in Tanzania. The study employed the Probit and Fixed Effects econometric techniques to establish empirical evidence on the influence of banking sector’s CSR on firms’ economic performance. A total of 20 registered banks by BOT were analyzed based on unbalanced panel data spanning from 2008 to 2019. The key findings revealed that, the likelihood of banks performance decreases with support offered by the banks to the society through CSR. The finding was consistent both in CSR offered to education and health sectors from both analytical methods. Such findings imply that managers need to review and develop appropriate marketing strategies of their firms in order to achieve a better firms' economic performance. The study recommends firms to manage their CSR schemes by reviewing related policies based on cost benefit analysis to establish consistent and win-win CSR strategies

Factors Influencing the Recovery of Non-Performing Loans in Commercial Banks: The Case of Exim Bank

This study aimed at evaluating different factors that influence the recovery of NPL by analyzing the management of NPL recovery in commercial banks in Tanzania. Using Exim Bank as the case study, the study evaluated NPL ratios, influence of internal management on recovery strategies, influence of third-party activities on NPL recovery and effects of regulatory guidelines on the recovery of NPL. SPSS was used to test the strength of the relationships between the study variables, using the Pearson Correlation Coefficient method. The study concluded that there is a negative strong relationship between NPL and net income, a positive strong relationship between internal management strategies and NPL recovery, a negative strong relationship between third-party recovery activities and NPL recovery and a positive strong relationship between the regulatory guidelines and NPL recovery. Keywords: Non-performing Loans, Commercial Banks, Exim Bank Tanzania DOI: 10.7176/EJBM/13-14-05 Publication date: July 31 st 2021

Impact of National Debt on Economic Growth in Tanzania: 1980-2019

This paper is based on the study that examined the impact of external and domestic debt on economic growth of Tanzania over the period 1980-2019. The study’s specific objectives were; to examine trends of external and domestic debts from 1980 to 2019, to determine long run relationship between external debt stock and economic growth in Tanzania from 1980 to 2019, and to examine the long run relationship between domestic debt and economic growth in Tanzania from 1980 to 2019. The study used time series data of Tanzania collected from the Bank of Tanzania (BOT), National Bureau of Statistics (NBS) and the World Bank indicators. The study used Vector error correction model (VECM) for estimation of the time series since all the variables’ data were stationary in first difference I (1), and there was cointegration within the variables. To ensure the validity and reliability of the data; the study carried out normality test, multicollinearity, heteroscedasticity, and unit root tests. The empirical findings reveal that both external and domestic debt significantly affects the economic growth of Tanzania. The study recommends that the government should promote moderate levels of domestic borrowing which can be sustained as it promotes economic growth if used in productive and efficient avenues. The study further recommends that policymakers should efficiently allocate and develop constraints that will ensure the external borrowing is utilized on more productive and development expenditures, so that the finance is a source of increase in net investment in the country.

Examining the Determinants of SMEs Credit Access from Commercial Banks in Tanzania

The economic development in most African countries is greatly supported by Small and Medium Enterprises (SMEs) due to insufficient large capital to start up giant factories. This makes it necessary to focus on how SMEs finance their activities. Extensive literature provides evidence that SMEs find it difficult to meet credit access requirement by Commercial. In view of this, the study aims to examine the determinants of credit access in Tanzania Commercial Banks (TCB) and SMEs access to the credit.The study adopted a survey based approach by choosing some commercial banks in Tanzania and randomly involving SMEs firms in the capital of the Tanzania. Using Multiple Regression Analysis, the study reveals that firm characteristics, legal documents, financial characteristics and SME owner have positive relationship with bank credit access. Most SMEs are denied credit from commercial banks due to their ineffective to provide the require materials such as financial statements, improper documentations and registration certificates, owners level of education which affects his or her understanding on credit lending and others. However, firms’ owner characteristics (education, age and experience) narrowly affect credit access. In addition, firm characteristics were perfectly significant with credit access.The paper suggested that priority sector lending and access to credit must be introduced in Tanzania. Also, policy maker should establish a credit guarantee scheme provides third-party credit risk mitigation to lenders. This will help to overcome the challenge of collateral requirement and others that make lending to SMEs risky. Keywords: Small and Medium Enterprises, credit determinants, commercial banks DOI: 10.7176/EJBM/13-4-01 Publication date: February 28 th 2021

Banks Performance: Does Treasury Single Account matter? Evidence From Selected Commercial Banks in Tanzania

This research assess the impacts of treasury single account on the financial performance of selected commercial banks in Tanzania. Data were collected from annual report of fourteen (14) commercial banks and Bank of Tanzania for the period of ten (10) years. The study used net interest margin as a dependent variable, government deposits as independent variable and both bank size and leverage were used as controlling variables. The data were analyzed by both EVIEWS 12 and STATA 16 using an ordinary least squares (OLS) regression model analysis. Our results concludes that treasury single account has impact on banks financial performance, the results shows that the government deposits has a significant positive effects on net interest margin. The possible reason for our results is the fact that Tanzania commercial banks were over relied on government funds rather than to mobilize funds from the un-banked among rural residents. Thus, the study recommend that for the commercial banks to improve their financial performance, they have to redefine the nature of competition, diversify economically and refocus on the original purposes for which they were set up- to collect deposits to customers especially from private sectors and un-banked Tanzanians.

Factors Influencing Profitability of Commercial Banks in Tanzania: A Case Study of CRDB Bank Plc

This study examines factors influencing profitability of commercial banks in Tanzania. This study uses the CRDB Bank Plc. as a case study to investigate the bank specific factors and macroeconomic factors on bank profitability. The study uses correlational research design to examine the bank-specific factors and macroeconomic factors on profitability. Time series data for the period spanning from 2008 to 2019 were used. The results indicate that bank-specific factors such as bank deposit, non-performing loans and bank expense are statistically significant on bank profitability. On the other hand, macroeconomic factors were found to be insignificant on bank profitability. The implication for this study is that commercial banks policies should be geared towards bank-specific factors in enhancing profitability rather than concentrating on macroeconomic factors which does contribute to bank’s profitability. The bank deposits mobilized should be used effectively in realizing profitability. In addition, bank expenses should be cost effective in order to enhance bank profitability.

Customers’ perception on service performance: A comparative analysis between foreign and local banks in Tanzania

This study was a comparative study of the level of service performance between foreign and local banks. It focused on customers’ perception of service performance. This comparison was purposely done due to the fact that different international banks have opened their branches in Tanzania, and this has in one way or another forced to change the competitive landscape of the country’s banking industry. The study had a sample size of 380 respondents who were the customers of these banks. Confirmatory Factor Analysis at the second-order level was analyzed by looking at the Chi-square statistical values, Incremental Fit Index, the Tucker-Lewis Fit Index, the Comparative Fit Index, the Parsimony Normed Fit Index, and the Root Mean Square Error Approximation as the indicators of the model fit. Mean values were compared between foreign and local banks. The main findings from the study indicate that the fit indices indicated measurement invariance of service performance. quality of service, service innovativeness, and cash distribution facilities were perceived better by foreign banks’ customers than local banks’ customers.

Promotion Strategies and Performance of Commercial Banks: Evidence from CRDB Bank Plc in Tanzania

This article is informed by the planned behaviour and hierarchy of effect theories to examine the influence of five traditional promotion strategies on the performance of commercial banks in Tanzania, taking evidence from one of the leading commercial banks in the country - CRDB Plc. This quantitative based study used a self-administered questionnaire to collect data from randomly selected 208 sampled employees. With the support of the Statistical Package for Social Sciences (SPSS) software, a hypothesised model that included promotion strategies as predictors of commercial banks’ performance was evaluated using a multiple linear regression model. The results supported the hypothesised model, indicating that all the promotion strategies had positive; and only four (excluding publicity) had important influence on the performance of commercial banks. From the findings, the study recommends that commercial banks need to innovatively prioritise adoption of the complementary use of the four significant promotion strategies of sales promotion, advertising, personal selling, and direct marketing to manage the performance of commercial banks. Nevertheless, publicity should not be entirely ignored as it also has some positive effect.

Appraisal of The Control 0f Industrial Policies to the Digital Economy: Proof from Tanzania

Recent in Tanzania evidence show that the rapid technology advancement resulted to the high and significant contribution to the Gross domestic product and economic development. Allude to that fact; the interrogation of policy infrastructure particularly industrial policies to pilot the digital economy is inescapable. The contemporary study is determined to explore the control of industrial policies to the digital economy specifically macroeconomic digital variables employed by the study (Information and Technology Gross Domestic Product and Population Using Internet) during the period from 2010 to 2017 in Tanzania. With respect to that, simple regression model is applied to inquire into the control of industrial policies to the digital economy in Tanzania during the period from 2010 to 2017. Ascribable to the sparseness of data, the only data accessible for the study during the period from 2010 to 2017 were gathered from the World Bank and the Bank Of Tanzania Annual Reports. Straight to investigate the control of industrial policies to the digital economy in Tanzania during the period from 2010 to 2017, industrial policies were represented by the economic openness which be positioned independent variable, while Information and Technology Gross Domestic Product and Population Using Internet were dependent variables in the study. The information discovered in the study was in actual fact catching the attention. Information discovered as a result of the exploration shows that the relationship between economic openness and all digital macroeconomic variable applied by the study (Information and Technology Gross Domestic Product and Population Using Internet) is Negative and meaningless. To such a degree industrial policies had no control to the digital economy during the period from 2010 to 2017 in Tanzania.