Bank Performance: Do Political, Legal and Regulatory Institutional Reforms Matter?

Abstract

This study sought to ascertain if political, legal, and regulatory factors influence the performance of Tanzania's publicly traded commercial banks. A quantitative data was obtained from three major commercial banks notably CRDB, NMB, and NBC with a sample size of 120 employees of the commercial banks. The result from multiple regressions shows that political and regulatory reforms improved commercial banks' operational performance. However, legal reforms had a significant negative impact on commercial bank operational performance. The study therefore recommends that commercial banks be politically flexible and adaptable to changing political regimes. Fiscal and monetary policies must be flexible. The central bank and ministry of finance and planning should regularly review regulations because they affect commercial bank performance, the research suggests. Legal reforms should be fair to commercial banks and their customers to avoid harming commercial bank performance.