A Dissertation Submitted in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Business Administration in Corporate Management (MBA-CM) of Mzumbe UniversityThis research examines and assesses the role of financial institution in the development of small and medium enterprises in AKIBA COMMERCIAL BANK Kariakoo Branch. Specifically the study identify the reasons for limited access to credit and other forms of finance for small traders in Tanzania, also to determine the role played by financial institutions on the growth of SME’s traders in the market place. From the sampling frame a representative sample of 50 respondents were obtained randomly and a survey was conducted on this sample using structured questionnaire. Data from the respondents was analyzed and translated into useful information using the statistical package for social sciences (SPSS). Frequency distributions were used to draw conclusions. The study found that there is a big role played by commercial banks on performance of small firms as the findings show that, commercial banks can contribute up to 15% of the performance of small firms by granting loans and advances. However, access to finance alone cannot play a big role unless it has combined with other variables such as production efficiency, marketing efficiency and networking. Therefore this study concludes that access to finance is very important for small firms in the whole process of achieving competitive advantage over competition. However, access to finance alone cannot be regarded as a panacea for small firms in guaranteeing superior performance. Moreover, study recommended that the firm owners and managers to put much emphasis on the factors hindering these firms in accessing finance from commercial as there is no doubt that, access to finance plays big role on performance.