The Impact of Covid-19 Pandemic, Liquidity and Profitability: Experience from Selected Banks in Tanzania

Abstract

This study aimed to examine the effects of COVID 19 pandemic on the liquidity and profitability of the Tanzanian banks that are listed in the Dar es  Salaam Stock Exchange. The study realised the objective by comparing the profitability and liquidity trend before and after the emergence of  COVID-19. The differences between these values were then statistically examined to evaluate the impact of COVID 19 on the trends before and after  the outbreak. The secondary data on the six selected banks were derived from the audited financial accounts for the six-year period (2016 to 2021),  which included the three years prior to and three years after the COVID 19 outbreak. The results showed that liquidity positions of most banks had  deteriorated. Regarding profitability, the results indicate that small sized banks experienced more declining profitability than was the case with big  banks. Furthermore, the statistical difference between the means of liquidity (proxy by liquidity ratio) and profitability (ROA) before and after COVID  19 were statistically insignificant at a 5 per cent level of significance. This implies that the impact of COVID 19 on liquidity and profitability of the  selected banks was minimal. The study provided an insight on the evidence that to a great extent the selected listed banks managed to mitigate the  impact of COVID-19 pandemic as they were not severely affected resulting from the bailout strategy devised by the Central Bank of Tanzania (BOT).