A Dissertation Submitted to Mzumbe University Dar es Salaam Campus
College in Partial Fulfilment of the Requirement for the Award of Degree of
Master of Science in Accounting and Finance (MSc – A&F) of Mzumbe
University
2014
The principal purpose of this study was to assess the role of treasury management in
mitigation of liquidity risk in the Tanzania banking industry. The main objectives of
the study were; firstly to determine how the treasury management support banks in
mitigation of liquidity risk. Secondly to assess whether treasury management have
the capacity to manage liquidity risk. And lastly to establish how banks in Tanzania
implement risk management procedures.
In achieving the formulated objectives, data were collected from both primary and
secondary sources. Primary sources of data collection involved the use of
questionnaires and interview, which were administered to respondents from different
public sector entities. Data were then analysed qualitatively and quantitatively in
order to arrive at the results which were discussed and presented in chapter four.
It was found that, management of liquidity risk is among the responsibility of the
staff of the department of treasury, and that, there are procedures in place for
mitigating liquidity risk that are stipulated in the risk management manual.
Furthermore, the bank has a set of guidelines and policies concerning the issues of
liquidity that are adhered by the bank.
It was also found that, the bank has competent personnel in dealing with liquidity
risk. However, the staffs are not regularly updated, as they do not frequently
participate in training. Furthermore, It was found that the Azania bank is
implementing the requirement of the Bank of Tanzania as they do have set of
procedures in managing liquidity risk.
The study noted that proper management of liquidity risk needs serious
considerations in terms of resources, capacity building to its staff as well as
efficiency adherence to the set of procedures and rules stated in the policy for
managing risk.