Factors Influencing Bank Lending Behaviour in Tanzania A Case of Listed Banks in Tanzania
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Date
2022-06-30
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Publisher
African Journal of Accounting and Social Science Studies (AJASSS)
Abstract
The study looked at bank and industry-specifc factors that influence listed
commercial banks’ lending behaviour in Tanzania for the fve-year period
from 2016 to 2020. Asset quality, capital adequacy, liquidity, and bank size
were employed as bank-specifc factors, whereas Gross Domestic Product
and inflation rate were used as industry-specifc factors. To establish the cause
and effect relationship between the response and explanatory variables, the
study used an explanatory research design. Secondary data were extracted
from seven listed commercial banks’ audited fnancial statements for a fveyear period, totalling 35 data points. After performing pre-regression analysis
(multicollinearity test), correlation and linear analysis were conducted. From
2016 to 2020, the study discovered that capital adequacy and bank size have
the biggest impact on Tanzanian listed commercial banks’ lending behaviour.
At 5 per cent level, other explanatory variables such as asset quality, liquidity,
GDP growth rate, and inflation rate were insignifcant. Thus, the study
concludes that capital adequacy and bank size influence the lending behaviour
of the listed commercial banks in Tanzania from 2016 to 2020. The research
was limited to seven Tanzanian listed commercial banks from 2016 to 2020.
Regardless of their capital adequacy or size, the banks should lend cautiously.
This is because, in today’s intensely competitive business, if larger banks with
massive capital lend irresponsibly, they are likely to collapse. Finally, the study
results demonstrated that the bank size and capital adequacy influence the
lending behaviour of the listed commercial banks’ in Tanzania
Description
Keywords
Lending behaviour, internal factors, external factors,, Listed banks, Business cycle theory