Bank Specific Determinants of Non-Performing Loans: Empirical Evidence from Commercial Banks in Tanzania

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Kingu, P. S.
Macha S.
Gwahula, R.

Abstract

This study examined bank specific determinants of non-performing loans using information from asymmetry theory, moral hazard theory and real business cycle theory. This study adopted causality research design, using panel data (2007 to 2015) of 16 commercial banks in Tanzania. Descriptive statistics and multiple regression analysis were the estimation methods employed, while Ordinary Least-Squares (OLS) regression technique was also used, and then Fixed Effects (FE) and Random Effects (RE) assumptions were considered.

The study found that asset growth, higher capital ratio and loan-to-asset ratio are negatively associated with the occurrence of non-performing loans, whereas cost inefficiency is positively associated with the occurrence of non-performing loans in Commercial Banks in Tanzania. The results extend further moral hazard theory, information asymmetry theory and Bad Management hypothesis. The study findings have both theoretical and managerial implications for practitioners and policy-makers.

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How to Cite
S., K. P., S., M., & R., G. (2017). Bank Specific Determinants of Non-Performing Loans: Empirical Evidence from Commercial Banks in Tanzania. The International Journal of Business & Management, 5(12). Retrieved from https://www.internationaljournalcorner.com/index.php/theijbm/article/view/125671