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Does Electronic Banking Affect Bank Performance in Tanzania? Evidence from Listed Commercial Banks

Josephat Lotto

The Institute of Finance Management




This paper aimed at examining the effect of electronic banking (mobile banking, internet banking and automated teller machine) on profitability of listed commercial banks in Tanzania. The findings show that there is a positive insignificant relationship between the internet banking and bank profitability. This may be explained by hefty initial costs incurred by banks in investments for appropriate infrastructure in facilitating internet banking channel. Regarding the mobile banking and usage of automated teller machines, the study depicts that both have statistically significant positive relationship with profitability at all conventional levels of significance, the avenue that provides extra incentive for commercial banks to utilize the transaction flow to generate more profits and serve costs which would have been incurred for conventional banking practices. These findings are of great importance to managers of commercial banks in Tanzania to understand the effect of electronic banking on profitability of commercial banks , and this may assist them in making decision on adoption of electronic banking, and further enlighten the policy makers in the banking industry on the effect of electronic banking on banks profitability, which, in a way, may provide guidance in designing appropriate policy for electronic banking adoption by commercial banking in Tanzania.


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