| dc.description |
The study primarily aims at determinants of profitability of commercial banks in Tanzania applying CAMEL frame work. This study compares the financial performance of three major banks CRDB, NBC and NMB. The three banks are also ranked based on a CAMEL rating system. The study is undertaken in attempt to fill in the existing research gap, also to confirm the role played by internal factors to determine profitability and last but not least to provide information that can be used as a basis for comparison with different studies. This study involves the analysis of commercial banks operating in Tanzania for a period of 7 years, from 2006 to 2012. Financial ratios in the context of CAMEL framework, which include; Capital Adequacy, Asset Quality, Management Quality, Earnings and Liquidity were applied. The research uses the data published by the sample banks in their annual reports and financial statements. Descriptive statistics were applied in analyzing the data, followed by deriving of CAMEL ratios and rating them and then correlation analysis was performed and finally regression was applied. The dissertation is organized into five chapters. Chapter one, problem setting; Chapter two deals with literature review which includes theoretical review, empirical review and conceptual framework. Chapter three is the research methodology; Chapter four is concerned with data analysis, findings and discussion and Chapter five gives the conclusion and recommendations. The CAMEL model predicts 51.74% of ROA; this calls for a more robust way of determining profitability to include external factors. NMB which is 50% foreign owned and 30% government owned proved to out rank the other two major banks CRDB and NBC. The study reveals that the profitability of commercial banks as measured by ROA is significantly determined by quality of assets. In order to improve profitability; credit information should be improved, and banks can opt to diversify their products so that they do not heavily rely on loans. |
|