The 2008 Global Economic Crisis: Mechanisms of Impacts and Responses in Banks in Tanzania

Ngowi, Honest Prosper (2013) The 2008 Global Economic Crisis: Mechanisms of Impacts and Responses in Banks in Tanzania. ["eprint_fieldopt_thesis_type_phd" not defined] thesis, The Open University of Tanzania.

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Abstract

The thesis explored the mechanisms through which banks in Tanzania were affected by the 2008 global economic crisis and the way they responded to the same. The Bank of Tanzania (BoT), Barclays Bank Tanzania Ltd and Tanzania Investment Bank (TIB) were taken as case studies. Secondary and primary data were used to inform the study. It was found that there are over twenty two (22) mechanisms through which banks can be affected by the crisis. The general mechanism through which the banks can be affected is through the impacts of the crisis on their customers. Mechanisms of impacts include defaults, debt re-scheduling, reduced lending and profits, stagnation in assets, more credit risk and reduced liquidity. Generally, BoT responded to the crisis in banking sector through various measures to ensure stability in the sector in the short and long term. Responses by individual banks included but are not limited to more carefull risk assessments, stress-testing, more adherence to regulations, provision of emergency liquidity, discussion with affected customers, capital injection in selected businesses and taking more long term and developmental view of customers. Conclusively, the 2008 economic crisis affected the Tanzanian banking sector through second-round effects of the crisis. It is recommended that authorities and banks should be virgilant in times of economic crisis. They should respond accordingly so as to avoid the danger of such crises leading into collapse of individual banks and eventually the banking and financial system as a whole.

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