Browsing by Author "Mbiru, Athuman Rashid"

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    Examination on determinants of interest rate spread in commercial banks: Evidence from Tanzania Commercial Banks
    (Mzumbe University, 2019) Mbiru, Athuman Rashid
    This research examines the determinants of IRS in commercial banks in Tanzania from the period of 2000-2017. The study used Stata econometric software to analyze panel data extracted from commercial banks' annual statements, Bank of Tanzania reports and World Bank indicator data. The analysis employed the Ho and Saunders (1981) pure interest spread concept where the analysis involved two step procedures to estimate the bank specific determinants and macro-economic determinants respectively. The Hausman test signified fixed effect model was suitable model for first step regression on determining the effects of bank specific determinants and Random effect model to be appropriate model for second step regression in accessing the power of macro-economic factors on IRS. The results observe that banks operational costs ratio and banks size are the banks specific factors that affect IRS in Tanzanian commercial banks. The study also observe GDP growth rate and Reserve requirement ration to be the macro-economic factors which significantly influence IRS in Tanzania. However the bank specific variables appear to be more suggesting factors that determine IRS in Tanzania commercial banks in comparison with macroeconomic factors, this were identified by showing high coefficient value that significantly affect IRS in Tanzania commercial banks. The study conclude that smaller banks are undermined by large banks with high technology and high capital base hence high cost in managing their operation but still compete with large banks by charging low lending rate and lead to their perishing. The study recommends stabilized policies to be employed by the Government and Regulating bodies to ensure growth of small and medium banks to enable them to penetrate market and break supremacy by the large banks.