Competition and stability in Tanzania banking industry.
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Date
2003
Authors
Journal Title
Journal ISSN
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Publisher
University of Dar es Salaam
Abstract
Banking business in the Tanzanian economy is of paramount importance. Its development through increased competition has been seen as a means of increasing efficiency through liberalization and deregulation of the financial sector. However increased competition has been identified as having the effect of endangering stability of the financial system by increasing market failure inherent with instability in the banking industry. This study examined how competition in the Tanzanian banking industry can affect its stability. It looked at how changes in the financial system are affecting the interaction between competition and stability and hoped to come out with policies that can create a trade off. The study was motivated by the fact that the world financial landscape is changing, so its policies regarding competition, regulations and supervision. The study examined all the existing commercial banks through literature, questionnaires and interviews from the stakeholders. The study found out that competition does exist in retail banking, however in order to reduce the risk involved in the lending market, most banks have resorted to relationship lending and increased information investment. There is also the need for the regulation and supervisory body to help encourage competition through proper governance, prudent supervision and encourage transparency of financial product sold.
Description
Available in print form
Keywords
Banks and banking, Banking stability, Tanzania
Citation
Kalo, M. (2003). Competition and stability in Tanzania banking industry. Masters dissertation, University of Dar es Salaam. Available at (http://41.86.178.3/internetserver3.1.2/search.aspx?formtype=advanced)