Factors that influence banks’ performance in existence of treasury single account

Abstract

This study systematically examines the implications of implementing the Treasury Single Account (TSA) on Tanzanian banks, focusing on profitability, efficiency, and stability. Through regression analysis, the first objective reveals a notable adverse effect of TSA on Return on Assets (ROA) and Return on Equity (ROE), indicating the extensive impact of increased scrutiny of public funds. The second objective uncovers statistically significant adverse effects on bank efficiency, particularly related to non-performing loans (NPLs), emphasizing the need for enhanced NPL management and technological adoption. The third objective highlights decreased stability post-TSA, with a significant negative impact on the loan loss provision to equity ratio. The study employed a descriptive research approach, influenced by literature, and utilized purposive and random sampling of 35 Tanzanian banks. Data collection involved a methodical examination of relevant documents, and quantitative techniques, including Difference-in-Differences (DID) regression models, were used for analysis. The results emphasize the substantial adverse impact of TSA on the stability, profitability, and efficiency of Tanzanian banks, calling for strategic initiatives in operational efficiency, revenue diversification, regulatory engagement, proactive risk management, and ongoing research to navigate financial market dynamics