A Dissertation Submitted in Partial Fulfilment of the Requirements for Award of the Degree of Master of Business Administration in Corporate Management of Mzumbe University
The purpose of the study was to assess the impact of credit information sharing on loan performance in commercial banks in Tanzania. The study had three specific objectives as follows; to examine credit information sharing levels and practices among commercial banks in Tanzania; to assess loan performance in commercial banks and to determine effects of the use of credit information sharing on the level of non-performing loans in commercial banks.
The study used a case study design that was able to allow an in-depth investigation of the problem at hand with a sample size of 50 respondents. Simple random and Purposive sampling approaches were used to attain the desired sample of the study. The study used questionnaires for collecting data. The data was presented in tabular form with frequencies and percentages. The data were descriptively analysed.
The study found that non-performing loans had been a challenge to the commercial banks. This is a clear indicator how commercial banks are struggling with non-performing loans and banks sampled have access to CRB. The study found that CRB is accessible to banks; they also make use of it as they make inquiries all the time regarding loan applicants. The findings in this regard revealed that the level on non-performing loans in commercial banks as very high. The study further found that conditions of lending have been relaxed due to CIS. In light of the above findings, it is thus a divided opinion and since the lending rates are set by BoT, it is difficult to only give credit to CIS as the reason as to why the rates are relaxed. The recommendations based on the Major Findings are that all banks should embrace and use Credit Information sharing as a tool to reduce and control Non-performing loans resulting from chronic defaulters. The study also recommends Commercial Banks to embrace Positive Credit Information in order to increase the borrower’s bargaining power.
The government should ensure mandatory compliance to settlement of debts as constitutionally required of the integrity section of the Tanzanian Law.