The Central Bank Supervision Stringency on bank stability

The case of Tanzania

Authors

  • Sara Eliufoo Student udsm
  • Henry Chalu The Institute of Finance management
  • J. King’ori University of Dar es Salaam

DOI:

https://doi.org/10.56279/ter.v15i2.216

Keywords:

Central bank supervision stringency, Bank stability, Regulatory capital stringency, Loan loss provisioning stringency, Loan diversification stringency

Abstract

This study examines the relationship between Central Bank supervision stringency and bank stability. It specifically focuses on 45 banks located in Tanzania and the fundamental objectives being to: examine how the central bank regulatory capital stringency influences bank stability, explore how the central bank loan loss provision stringency influences bank stability and to examine how the central bank loan diversification stringency influences bank stability.  Utilizing Agency Theory and Financial Intermediation Theory as theoretical frameworks, the study examines how these regulatory measures influence bank stability. Structured questionnaires were administered to 225 bank employees encompassing key positions including Credit Officers, Finance Officers, Human Resource Officers, Internal Audit Officers and Risk and Compliance Officers. These respondents were used in providing data needed for hypotheses testing using Structural Equation Modelling under Smart PLS 4.0.  By using the strengths of Agency Theory and the Financial Intermediation Theory, arguably, the paper suggests a theoretical model that explains how the central bank supervisory stringency can influence bank stability

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Author Biography

J. King’ori, University of Dar es Salaam

Department of Accounting, University of Dar es Salaam School of Business,

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Published

2025-12-31

How to Cite

Eliufoo, S., Chalu, H., & King’ori, J. (2025). The Central Bank Supervision Stringency on bank stability : The case of Tanzania . Tanzanian Economic Review, 15(2), 29–55. https://doi.org/10.56279/ter.v15i2.216

Issue

Vol. 15 No. 2 (2025): Tanzanian Economic Review

Section

Articles

License

Copyright (c) 2025 Sara Eliufoo, Henry Chalu, J. King’ori

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Authors who publish in the Tanzania Economic Review retain the copyright to their work and grant the University of Dar es Salaam a non-exclusive license to publish, reproduce, and distribute the article.

this article is published under the Creative Commons Attribution 4.0 International (CC BY 4.0) License, which permits unrestricted use, distribution, adaptation, and reproduction in any medium, provided the original work is properly cited.