Assessment of performance of domestic and foreign commercial banks in Tanzania using the camels’ model: the case of six commercial banks in Tanzania
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Date
2011
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University of Dar es Salaam
Abstract
This research analysed the performance and the reasons for differences in performance therein between domestic and foreign commercial banks in Tanzania and a way forward towards improving the same. The research used data for six commercial banks in Tanzania for three years period starting from year 2007 to year 2009. The CAMELS model was applied in analyzing computed ratios therein. Other data were collected through documentary sources, interview and questionnaires. SPSS was applied to analyse qualitative data. Sampled commercial banks were, NMB, CRDB, EXIM, Standard Chartered, NBC and Stanbic Bank whereby, the first three banks represented domestic banks while the rest represented foreign banks whereby the latter was defined by foreign ownership by more than 50% of shareholding All the six sampled commercial banks are among the top eight banks in terms of Assets. (Banking Supervision Annual Report, 2009).The results of the analysis gives evidence that, domestic banks perform better than foreign banks due to the fact that, except for management capability, the rest of the indicators, including the Capital Adequacy, Assets Quality, Earnings, Liquidity, and Sensitivity to Market, show that domestic banks have better performance compared to foreign banks. In view of that, among the measures suggested to improve the performance of commercial banks in Tanzania include, diversification of target market (to include both retail and corporate banking), increase branch networks, improve ICT infrastructure, increase customers awareness of banking business, as well as offering favorable lending rates to medium and small enterprises in order to encourage lending activities which will ultimately increases banks profitability and capital respectively.
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Keywords
commercial banks in Tanzania, Assessment of performance of domestic, foreign commercial banks, Tanzania
Citation
Goodhope, M (2011)Assessment of performance of domestic and foreign commercial banks in Tanzania using the camels’ model: the case of six commercial banks in Tanzania, master dissertation, University of Dar es Salaam (available at)