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This study analyzes the effects of Bank lending rates on economic growth in Tanzania since
1980 to 2017. Bank lending rate was not studied in isolation, they were some additional
variables studied, like rate of inflation, investment and rate of exchange whose effects to the
economic growth were additional established. The objective of the study is to look out the
relationship on how bank lending rate affects economic growth. Data were obtained through
secondary sources from Bank of Tanzania and World Bank, also the methodology used was
error correction model to examine the results of bank lending rates on GDP growth in
Tanzania. Error correction model analysis, shows that bank lending rate, and investment are
positively associated with economic growth while inflation rate and exchange rate are
negatively related to economic growth. Bank lending rate, investment and exchange rate are
found to be significant determinant of economic growth however not inflation rate. It is
therefore recommended that the government should have policies in places to look at the
lending rate, same to significant variables that are investment and exchange rate. |
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