A Dissertation Submitted in Partial Fulfillment of the Requirement for Award
of the Degree of Master of Business administration in Corporate Management
(MBA-CM) of Mzumbe University
The general objective of this study was to assess the causes of increasing nonperforming loans in Tanzania commercial banks. This study had three specific
objectives which were the causes of increasing non- performing loans related to
banking operations, causes of increasing non-performing loans which relates to
customers operations and the causes of increasing non-performing loans in relation
with the Government policy.
The study applied descriptive type of study. The involvement of 127 respondents was
adopted as its sample size whereby CRDB Bank borrowers were used as a
researcher’s population in study. In acquiring the sample size of the study, the
researcher applied both purposive sampling technique and simple random methods.
By applying these two methods in obtaining sample to be used, the study was very
clear and made sure that there was equal engagement from various kinds of
respondents hence made the study to be consistent as well as applicable and of
sound. In data collection, questionnaires and interviews were applied. The researcher
used multiple regressions in data analysis. It is concluded that poor credit appraisal
system, poor bank policies andiover and iunder financing ileads ito increase ito NPL.
The small size of loans also influences non-performing loans because most of small
size loans generate little or no enough profit to the business invested.
It has been evidenced that many business oriented people doesn’t possess any
potential financial control skills, booking keeping skills as well as marketing
education. This directly affects the loan repayment hence business lack in overall
management.
Lastly the findings on the government policy factors influencing non- performing
loans from CRDB shows that, individuals who needs credits thought CRDB bank
policies regarding the charged rates are not favorable to their business development
when paying back the given loansS. The study recommends that the stakeholders ion
the microfinance sector should ensure that, the borrowers have access to adequate
relevant training on the microfinance businesses.