Banks Performance: Does Treasury Single Account matter? Evidence From Selected Commercial Banks in Tanzania

Abstract

This research assess the impacts of treasury single account on the financial performance of selected commercial banks in Tanzania. Data were collected from annual report of fourteen (14) commercial banks and Bank of Tanzania for the period of ten (10) years. The study used net interest margin as a dependent variable, government deposits as independent variable and both bank size and leverage were used as controlling variables. The data were analyzed by both EVIEWS 12 and STATA 16 using an ordinary least squares (OLS) regression model analysis. Our results concludes that treasury single account has impact on banks financial performance, the results shows that the government deposits has a significant positive effects on net interest margin. The possible reason for our results is the fact that Tanzania commercial banks were over relied on government funds rather than to mobilize funds from the un-banked among rural residents. Thus, the study recommend that for the commercial banks to improve their financial performance, they have to redefine the nature of competition, diversify economically and refocus on the original purposes for which they were set up- to collect deposits to customers especially from private sectors and un-banked Tanzanians.