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The study aimed at looking on the Determinants of Community Banks profitability in Tanzania a case of Mufindi Community Bank. This was because community banks have a number of problems that affect its profitability such as loan default, increasing operating expenses, interest rates, credit risk management and banks management of loan portfolios. In the light of attaining such aim; the objectives of the study was to assess the determinants of the community bank‟s profitability, to examine the internal factors that determines the performance of community bank profitability, to examine factors determining bank interest, to assess the performance of community banks loan portfolio. To examine the credit risk management procedures by the community bank, and to examine the effect of operating expenses to community bank profitability. Information for Six years (2005-2011) from MuCoBa annual reports obtained from their documents and which is published on their website provided qualitative and quantitative data for analysis. To find relationship the model of William Bentum (2012) was applied in descriptive analysis. The results have been organized and processed in figures and presented in tables. Results from the study reveal that the performance of the MuCoBa has been highly volatile with the banks reporting lowest ROA in year 2007 and 2008. The study also revealed that existing community bank performance or profitability is so depending on efficiency of endogenous variable which is under community bank management control as the key button to touch for successful performance of community banks. This study also indicate volatility of community bank ROA in Tanzania is explained most by variables of interest rate charged by the bank, operating expenses, loan portfolio, credit risk, on which have shown statistically significance in explaining variation of MuCoBa ROA. High interest rates were among the factors, which need attention for the purpose of increasing performance of MuCoBa. |
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