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Microeconomic and Macroeconomic Drivers of X-Inefficiencies of Community Banks in Tanzania

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dc.contributor.author Mataba, Lucas D.
dc.date.accessioned 2022-09-14T07:20:21Z
dc.date.available 2022-09-14T07:20:21Z
dc.date.issued 2019
dc.identifier.issn 0856-9037
dc.identifier.uri http://repository.mocu.ac.tz/xmlui/handle/123456789/309
dc.description Banking, Accounting and Finance en_US
dc.description.abstract Over a span of years efficiency in Tanzanian Community Banks (CBs) has been low. The specific and macroeconomic drivers of inefficiency, however, have not been uncovered. Using tobit regression and triangulation methods the study analyzed the drivers of inefficiency and found that gross loans to total deposit (Gltd), bank size (logassts), return on average assets (RoaA) and capital adequacy ratio (CarI) were statistically significant ancl negatively related to most bank inefficiency measures; while net interest margin Nim) was statistically significant and positively related to inefficiency. The effect of macroeconomic factors on inefficiencies was not uniform; with GDP having an unexpected, statistically significant and positive relationship with inefficiencies. The positive relationship is seemingly explained by the decreasing contribution of agriculture to the Tanzanian GDP. Policy-wise, these findings imply that bank regulators need to encourage community banks to increase their asset base in order to control inefficiencies. Moreover, community banks' management need to reconcile between gross loan to deposit (Gltd) ratio and liquidity, as higher Gltd ratio may compromise optimal liquidity in banks. On the effect of Net interest margin (Nim), management should revisit their pricing policies in order not only to reduce inefficiencies but also to attract deposits from savers. With regard to the effect of GDP on inefficiency, community banks need to diversify in other sectors of the economy so as to mitigate excessive dependency on agricultural lending. en_US
dc.language.iso en en_US
dc.publisher Journal of Co-operative and Business Studies (JCBS) en_US
dc.relation.ispartofseries Vol. 4;No. 1
dc.subject Drivers of infficiency en_US
dc.subject Cooperative banks en_US
dc.subject Community banks en_US
dc.title Microeconomic and Macroeconomic Drivers of X-Inefficiencies of Community Banks in Tanzania en_US
dc.type Article en_US


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