Factors Affecting Non-Performing Loans in Banking Sector in Tanzania.

Joshua, Gloria Adrian (2024) Factors Affecting Non-Performing Loans in Banking Sector in Tanzania. Masters thesis, The Open University of Tanzania.

PDF - Submitted Version Available under License Creative Commons Attribution. Download (327kB)

Abstract

The study determined the factors affecting non-performing loans in Tanzania's banking sector. Specifically, the study determined the influence of inflation on non-performing loans, the influence of liquidity on non-performing loans, the influence of gross domestic product on non-performing loans, and the influence of capital adequacy on non-performing loans in Tanzania. The study used a descriptive research design and secondary data that covered the period from 2019 to 2023. Correlation and multiple regression analysis analyzed the data using STATA software. The results showed that liquidity had a significant impact on non-performing loans. Also, the results showed that inflation significantly influenced non-performing loans. Moreover, the results showed that gross domestic product significantly influenced non-performing loans. Likewise, the results showed that capital adequacy did not significantly influence non-performing loans. The study recommends that the Bank of Tanzania increase its GDP monitoring framework while assessing the soundness and stability of the country's banking sector. Furthermore, the study recommends that commercial banks keep their liquidity ratio at the required rate, which will reduce the NPL ratio. The study suggests that efficient loan management should be a priority. Furthermore, inflation should be controlled to promote a more stable economic climate that supports borrowers' financial health by lowering the risk of non-performing loans. Keywords: Factors, Non-Performing Loans, Banking Sector, Tanzania

Actions (login required)

View Item