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Influence of efficiency measures and bank categories on non-performing loans threshold among community banks in Tanzania

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dc.contributor.author Mataba, Lucas D.
dc.date.accessioned 2023-08-16T06:57:15Z
dc.date.available 2023-08-16T06:57:15Z
dc.date.issued 2021
dc.identifier.citation Mataba, L. (2021). Influence of efficiency measures and bank categories on non performing loans threshold among community banks in Tanzania, East African Journal of Social and Applied Sciences, 3(1), 60-73. en_US
dc.identifier.issn 2714-2051
dc.identifier.issn 0856-9681
dc.identifier.uri http://repository.mocu.ac.tz/xmlui/handle/123456789/439
dc.description The current issue and full text archive of this journal is available at: http//www.mocu.ac.tz en_US
dc.description.abstract Over the past twelve years Non-Performing Loans (NPLs) ratio in Community Banks (CBs) has been above the threshold of the overall bank industry. Operating above the NPLs industry ratio threshold connotes potential danger while the contrary is core for maintaining a safe loan portfolio. This study examined the influence of CBs’ efficiency measures and bank categories on the NPLs ratio threshold using unbalanced panel data from 9 CBs in a span of 17 years. Probit regression modelled the relationship between variables. The study establishes that Technical efficiency under Constant Returns to Scale (TeCRS) increased the probability of CBs to operate within NPLs threshold, while Scale efficiency (SE) and Technical efficiency under Variable Return to Scale (TeVRs) decreased the chances. Furthermore, Co-operative Community Banks (CCBs) had lower chances to NPLs threshold compared to Non-Co-operative Community Banks (NCCBs). The results are consistent with moral hazard hypothesis. The policy implications are that, bank regulators (BOT) should control CBs’ undue expansion to limit overstretching their capacity. Furthermore, CBs should fortify group lending methodologies in dealing with small borrowers. Moreover, bank regulators should reinforce capital adequacy regulations to curb excessive risk taking in CCBs in order increase probability to operate within NPLs threshold. en_US
dc.language.iso en en_US
dc.publisher East African Journal of Social and Applied Sciences (EAJ-SAS) en_US
dc.relation.ispartofseries Vol.3;No.1
dc.subject Community en_US
dc.subject Banks en_US
dc.subject Efficiency en_US
dc.subject NPLs en_US
dc.subject Tanzania en_US
dc.title Influence of efficiency measures and bank categories on non-performing loans threshold among community banks in Tanzania en_US
dc.type Article en_US


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