Towards Embracing Effective Governance in Tanzania Financial Sector: Does Institutional Quality Influence Banking Sector Financial Depth?
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Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute

Economics and Business

Quarterly Reviews

ISSN 2775-9237 (Online)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
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Published: 18 January 2024

Towards Embracing Effective Governance in Tanzania Financial Sector: Does Institutional Quality Influence Banking Sector Financial Depth?

Josephat Lotto

The Institute of Finance Management

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

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doi

10.31014/aior.1992.07.01.557

Pages: 27-40

Keywords: Financial Depth, Control of Corruption, Rule of Law, Government Effectiveness, Regulatory Quality

Abstract

This paper aimed at examining the influence of institutional quality on the banking sector's financial depth in Tanzania for a period between 1991 and 2022. In this paper institutional quality is measured by control of corruption, rule of law, government effectiveness, and regulatory quality. The paper employed secondary data from World Bank Governance development indicators and World Bank financial development indicators. A robust regression model was used to analyse data. The paper found that control of corruption, rule of law and regulatory quality have a positive influence on the banking sector financial depth while only government effectiveness influence negatively the banking sector financial depth. The findings imply that improved control of corruption, appropriately following rule of law can lead to a more transparent and accountable regulatory environment, which in turn fosters greater confidence in the banking sector, and also effective government policies attract fast deepening of financial sector. Eventually, to enhance institutional quality towards deepening banking sector depth in Tanzania, the government should focus on enhancing anti-corruption efforts and promoting transparency and accountability in both the public and private sectors. On the other hand, strategies to enhance inter-agency coordination, streamlining decision-making processes, and improving public service delivery in areas affecting the banking sector should be developed and implemented. Finally, the government should focus on strengthening its legal and regulatory frameworks with emphasis on promoting fair and impartial dispute resolution, protecting property rights, and enforcing contracts.

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