| dc.description.abstract | A stable financial sector helps promote and strengthen economic growth by mobilizing
resources for investment. It also provides a frame work for undertaking monetary policy.
The banking sector is very important in any economy, considering its basic function of
which is to relocate funds from agents with surplus to those with deficit .The purpose of
this study was to establish the effect of operational risk on the financial performance of
commercial banks in Tanzania. The total population consisted of all 36 commercial banks
in Tanzania as at 31st December 2013. Since the population of the study was small there
was no need for sampling hence the whole population was used for the study. The study
was used secondary data which was readily available from the Bank of Tanzania and the
all the commercial banks hence a census study. The study adopted a descriptive survey of
the commercial banks in Tanzania. Secondary data was collected from financial reports
of commercial banks in Tanzania from 2009 to 2013.Regression analysis was conducted
in order to establish the effect of Operational risk management on financial performance
of commercial banks in Tanzania. These variables included the Credit risk, the
Insolvency risk and the Operations efficiency usually provided by the Bank of Tanzania.
The dependent variable of the study was the financial performance of the commercial
banks in Tanzania and this was measured using the return on assets as a percentage. The
findings from the study confirmed that the independent variables such as such as Credit
risk, Insolvency risk and Operation efficiency had varying degrees of relationship with
the financial performance of the commercial banks in Tanzania. The study also revealed
that Operations risk management positively influenced returns of the commercial banks
in Tanzania. This study also established that Operations efficiency were positively
correlated with the financial performance of the commercial banks in Tanzania while the
Credit risk and Insolvency risk rate negatively influenced the financial performance of
commercial banks Tanzania. This study therefore recommended that the Commercial
banks should handle their risk factors appropriately as the changes in the risk factors like
operational risk bring about devaluation of the currency and affect the performance of the
commercial banks listed in the DSE. | en_US |
