The Impact of Agent Banking on Profit Maximization to Commercial Banks in Tanzania: A Case Study of CRDB Bank Plc (2014 - 2018)
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Mzumbe University
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A Dissertation Submitted in Fulfilment of the Requirements for Award of the
Degree of Master of Business Administration (MBA) in Corporate Management
of Mzumbe University
Agent banking is a business of providing banking services to the customers of a bank or a financial institution on behalf of that particular bank or financial institution under a valid agency agreement. Since launched in Tanzania in the year 2013, agent banking has seemed as a successful channel for improving commercial banks’ market shares, financial performance, profitability as well as promoting financial inclusion. This study aimed to examine the impacts of agent banking on profit maximization to commercial banks in Tanzania, using a CRDB Bank PLC as a case study from the year 2014 to 2018 while focused on factors such as total numbers of agent branches and the value of transferred money i.e. total values of cash deposits and withdraws. The research conducted is a quantitative research whereby a case study design and descriptive survey design was used to examine the impacts of agent banking on profit maximization. To achieve the objectives of the study, the researcher used secondary data and information such as a number of agent branches, the value of agent banking deposit and withdraw transactions and the Net profit before tax were collected from financial statements, annual reports, supervisory reports, etc. The descriptive analysis, Pearson’s correlation analysis, and regression analysis techniques were used to analyse the data collected. The findings indicated a statistically insignificant positive relationship between agent banking and the profit maximization of the CRDB Bank Plc. That increasing in the number of agents banking branches and increasing in agent banking withdraw transactions have positive impacts to profit maximization of the commercial banks, as in accordance with the results of the study both two factors impacted the profit maximization by 20.6% and 11.2% respectively. Also, the study found that the agent banking deposit transactions impacted negatively profit maximization by 33.4%.
Agent banking is a business of providing banking services to the customers of a bank or a financial institution on behalf of that particular bank or financial institution under a valid agency agreement. Since launched in Tanzania in the year 2013, agent banking has seemed as a successful channel for improving commercial banks’ market shares, financial performance, profitability as well as promoting financial inclusion. This study aimed to examine the impacts of agent banking on profit maximization to commercial banks in Tanzania, using a CRDB Bank PLC as a case study from the year 2014 to 2018 while focused on factors such as total numbers of agent branches and the value of transferred money i.e. total values of cash deposits and withdraws. The research conducted is a quantitative research whereby a case study design and descriptive survey design was used to examine the impacts of agent banking on profit maximization. To achieve the objectives of the study, the researcher used secondary data and information such as a number of agent branches, the value of agent banking deposit and withdraw transactions and the Net profit before tax were collected from financial statements, annual reports, supervisory reports, etc. The descriptive analysis, Pearson’s correlation analysis, and regression analysis techniques were used to analyse the data collected. The findings indicated a statistically insignificant positive relationship between agent banking and the profit maximization of the CRDB Bank Plc. That increasing in the number of agents banking branches and increasing in agent banking withdraw transactions have positive impacts to profit maximization of the commercial banks, as in accordance with the results of the study both two factors impacted the profit maximization by 20.6% and 11.2% respectively. Also, the study found that the agent banking deposit transactions impacted negatively profit maximization by 33.4%.
Keywords
Agent banking, Banking services, Financial institution