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The Economics and Finance Letters

June 2021, Volume 8, 1, pp 61-69

Factors Influencing Profitability of Commercial Banks in Tanzania: A Case Study of CRDB Bank Plc

Moga Tano Jilenga

,

Patrick Luanda

Moga Tano Jilenga 1 ,

Patrick Luanda 1 
  1. Department of Accounting and Finance, Institute of Accountancy Arusha, Tanzania. 1

Pages: 61-69

DOI: 10.18488/journal.29.2021.81.61.69

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Article History:

Received: 07 December, 2020
Revised: 25 January, 2021
Accepted: 19 February, 2021
Published: 16 March, 2021


Abstract:

This study examines factors influencing profitability of commercial banks in Tanzania. This study uses the CRDB Bank Plc. as a case study to investigate the bank specific factors and macroeconomic factors on bank profitability. The study uses correlational research design to examine the bank-specific factors and macroeconomic factors on profitability. Time series data for the period spanning from 2008 to 2019 were used. The results indicate that bank-specific factors such as bank deposit, non-performing loans and bank expense are statistically significant on bank profitability. On the other hand, macroeconomic factors were found to be insignificant on bank profitability. The implication for this study is that commercial banks policies should be geared towards bank-specific factors in enhancing profitability rather than concentrating on macroeconomic factors which does contribute to bank’s profitability. The bank deposits mobilized should be used effectively in realizing profitability. In addition, bank expenses should be cost effective in order to enhance bank profitability.
Contribution/ Originality
The study contributes to the existing literature on the factors that contributes to profitability in the commercial bank sector using correlational research design within a time series data spanning a period from 2008 to 2019. The paper contributes that -specific factors such as bank deposit, non-performing loans and bank expense are statistically significant to bank profitability and bank deposits be mobilized effectively to realize profitability.

Keywords:

Bank-specific factors, Macroeconomic factors, Bank profitability, Performance, Commercial Banks, Tanzania.

Reference:

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Statistics:

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Funding:

This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.

Acknowledgement:

Both authors contributed equally to the conception and design of the study.

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