The effect of credit risk management on the financial performance of commercial banks in Tanzania:

Abstract

The study has examined the effect of credit risk management on the profitability of commercial banks in Tanzania using NMB Bank PLC as the case study. The study has used secondary data collected from published financial statements spanning the period between 2010 and 2020 on a quarterly base that count to the total of 44 numbers of observation and used for the analysis. Financial profitability of the banks has been proxied by return on assets. Independent variables included, nonperforming loan ratio, capital adequacy ratio, total loans to total deposits ratio and loan loss provision to non-performing loan ratio. using Johansen Maximum Likelihood Co Integration Test and Error Correction Regression. Results models shows loan deposit ratio, loan loss provisions, non-performing loans and capital adequacy have effect in long run to the return on assets of commercial bank in Tanzania.