The Influence of Corporate Governance on The Performance of Commercial Banks in Tanzania

Abstract

Corporate governance has been an interesting topic in the recent years, since it has been attached with the rise, succession and fall of various entities. This study aims at analysing the influence of corporate governance on the performance of commercial banks in Tanzania, the banks that are listed in the Dar es Salaam Stock Exchange market namely CRDB, AKIBA, NMB, AZANIA and KBC. Specifically, the study also aimed at determining whether the board structure, including board size, Chief Executive Officer duality and board composition in terms of gender have influence on performance of these Dar es Salaam Stock Exchange listed commercial banks. The study adopted Agency Theory and Stewardship Theory to establish the relationship between the key variables. The study used quantitative method applied over five years on collected primary from the financial reporting and accounting department of these banks. The data was analysed descriptively and using Levene's Test for Equality of Variances. The findings revealed that all these banks have more than five members and more of these banks do have Chief Executive Officer duality while only one bank do not a female board member in its board. The study also found that there is no significant difference in the performance of banks with an equal average number of board members. The study found out that there is no significant difference in the performance of banks in Tanzania categorized according CEO Board Duality status and finally there is no significant difference in the performance of banks in Tanzania categorized according to gender representation rates and firm size. It is concluded that critical elements of corporate governance have most likely the same results towards the performance of commercial banks n Tanzania. The findings of this study can contribute in many areas in the developing countries like Tanzania for standard setters, policy makers, scholars and accounting fields like accounting standards. Further studies suggested could focus on the other elements of corporate governance such as board meetings and others apart from board of directors. Also focus can be kept on Africa or other underdeveloped countries.