Open AccessDeterminants of lending behaviour of commercial banks in Tanzania
Author(s) -
David Makanile,
Dickson Pastory
Publication year - 2022
Publication title -
international journal of research in business and social science
Language(s) - English
Resource type - Journals
ISSN - 2147-4478
DOI - 10.20525/ijrbs.v11i2.1638
Subject(s) - market liquidity , business , tanzania , capital adequacy ratio , position (finance) , interest rate , capital (architecture) , finance , capital requirement , financial system , economics , incentive , archaeology , socioeconomics , microeconomics , history
This paper assesses the determinants of the lending of six commercial banks in Tanzania from 2015 to 2019 using a quantitative research design. The data were collected from Annual Reports of the six commercial banks. The results show that liquidity and capital adequacies have a significant relationship with lending, whereas interest rate and management efficiency have no statistically significant influence on lending. Thus, effective policies should be developed to ensure commercial banks grow and be able to advance more credit. Additionally, the banking sector needs to prioritize increasing the liquidity ratio to ultimately strengthen the bank's financial position. Furthermore, commercial banks should be more innovative in their lending since different sectors present different risk profiles. Lastly, Commercial banks management needs to employ capital growth strategies to enhance the banks’ capital conservation buffer that requires banks to build up extra buffers outside periods of stress.