Effect of Bank Liquidity on Tanzania Commercial Banks Profitability in Tanzania: A Case of CRDB 1998-2020.

Membe, Rabii Y. (2022) Effect of Bank Liquidity on Tanzania Commercial Banks Profitability in Tanzania: A Case of CRDB 1998-2020. Masters thesis, The Open University of Tanzania.

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Abstract

This study is to examined the Effects of bank liquidity on Tanzania commercial banks profitability. The study employed Bank size, Capital Adequacy Ratio, Operating Efficiency Ratio, Credit Risk Ratio and Liquidity Ratio as Independent Variable as well as Commercial Banks Profitability represented by Return on Asset as dependent variable. The study employed Descriptive research design and multiple regression model was adopted. Furthermore, Stata was dedicated to analyze the Data financial reports for the period of 23 years. The results revealed existence of insignificant influence of Liquidity on Tanzania Commercial Bank Profitability, also the analysis found a significant negative influence of Bank Size Credit Risk and Operating Efficiency ratios to profitability as well as insignificant relationship between Capital Adequacy Ratio and ROA. The study concluded with presence of high influence of Liquidity on Tanzania commercial banks profitability as shown in regression model, other factors, Bank size, Capital Adequacy, Credit Risk and Operating Efficiency had influence as well. This study recommended that the Commercial bank management should invest in liquidity risk management that efficient utilization of Liquidity, also develop effective policies to reduce Non-Performing Loans, Minimize the operation costs to ensure maximum possible profitability realization. Keywords: Liquidity, Commercial Banks, Bank size, Profitability, Tanzania.

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