Relationship between Banks’ Perception on Bank of Tanzania Regulatory Reviews and Financial Performance: Evidence from selected Commercial Banks in Tanzania

Abstract

The Central Bank of Tanzania has undergone various bank regulations reviews at different periods of time such as the one undertaken in 1998, 2008 and 2014. This study, therefore, intended to assess the relationship between banks perception on regulatory requirements reviews decisions and the bank performance. The study employed a cross-sectional design with the target population of 36 commercial banks. A sample of 120 respondents were selected from 24 commercial banks obtained in Dar es Salaam City. Primary data were collected from bank managers while secondary data were collected from audited annual financial statements. Descriptive statistics and correlation analysis were used for data analysis. Findings from the study showed that most banks had high perception regarding new regulations.  However, the study noted low perception on the number of quarterly publication days, and on liquidity and cash reserve ratios requirements which seemed to be difficult for most banks to afford. Correlation analysis results showed that the relationship between banks perception on the new regulatory requirements and the financial performance was positive and significant with a high degree of correlation. The study concludes that most banks highly supported the reviews made by the BoT on capital adequacy and information reporting and disclosure requirements. The study recommends that commercial banks need to implement the new capital adequacy requirements and information reporting and disclosure requirements with special attention in order to make banks more profitable. Moreover, the regulator of banks needs to think on reviewing publication days and liquidity requirements.