Selected factors contributing to losses in commercial banks in Tanzania.

This study aimed at examining selected factors contributing to losses in commercial banks in Tanzania. Specifically, the study aimed to identify causes of loses in commercial banks in Tanzania, to identify the nature of losses in commercial banks in Tanzania and examine strategies taken by commercial banks and the government to alleviate losses in commercial banks in Tanzania. The study involved 100 heads of households from three selected wards who provided their opinions on the study topic. Both qualitative and quantitative methods "'ere employed in data collection. Combination of both methods ensured methodological triangulation so as to maximize the quality of data collected. The study revealed that the natures of losses to commercial banks are from general causes, bank specific causes and client specific causes. Moreover, the study noted out different causes of loss to commercial banks, these are inadequate management of credit risk, political system and crises, international financial, increases in interest rates and asset market effects on balance sheets. On top of that economic downturn, macroeconomic instability, legal problems and insider lending which leads to high rates on non-performing loans also contributes to losses in commercial banks in Tanzania. The study recommends that commercial banks should involve board of directors in approving risk policies and use automated risk management. Also, banks should lower lending interest rates reorder to reduce the rate of non-performing logins. The researcher recommends that further studies should be conducted on effectiveness of measures taken by banks in alleviating losses.