Influence of Financial Management Practices on Performance of Village Community Banks: Empirical Evidence from Arumeru District, Tanzania

Abstract

This study examined the influence of financial management practices on the performance of Village Community Banks (VICOBA) in the Arumeru district. The specific objectives were to assess the influence of financial management practices, particularly cash management, accounting information, and internal control, on the financial performance of VICOBA. An explanatory research design was employed, and data were collected via structured questionnaires administered to 136 respondents from different VICOBA groups. A simple random sampling technique was used to determine the sample size. Descriptive statistics and regression analysis were performed in SPSS to analyse the data. The findings revealed that cash management practices, particularly internal control over accounting information, positively and significantly influenced VICOBA's financial performance. The study concludes that cash management, the accounting system, and internal control played a significant role in improving VICOBA's financial performance in Arumeru district, Tanzania. The study recommends that VICOBA leaders and members strengthen their cash management procedures, maintain proper financial records, and enforce internal control systems to improve efficiency. Policymakers and supporting agencies should provide capacity-building programs, training, and technological support to enhance VICOBA's effectiveness.