International journal of academic research in business & social sciences, Aug 21, 2018
Tanzania economy like of many other emerging market have seen rapid increase number of banks loca... more Tanzania economy like of many other emerging market have seen rapid increase number of banks locally and foreign owned since financial sector liberalization in 1990's even though clear impact of financial sector on economic growth is hard to be singled out. The paper investigates empirically the long run relationship between selected proxies of financial development and economic growth in the Tanzanian context. Using the vector error correction model (VECM), the study finds that financial development is cointegrated with economic growth. That is there is a long run relationship between chosen proxies of financial development and economic growth in the country. This paper used broad money supply M2, foreign direct investment, customer deposits in foreign and domestic banks, credit extended by foreign and domestic banks as percentage of GDP as proxies for financial development. While per capita growth rate used to measure economic growth. The results also show the need to develop even further the financial sector through appropriate regulatory and macroeconomic policies in order to ensure sustainable economic growth as well as economic development. For robustness of the results other test were also performed in this study such as Augmented-Dickey Fuller unit root test and Johansen cointegration test.
International Journal of Academic Research in Business and Social Sciences, 2020
This paper sought to examine some of the considered determinants of capital structure of large fi... more This paper sought to examine some of the considered determinants of capital structure of large firms in Tanzania. The paper examines the dynamics of capital structure of sampled 85 unlisted firms in Tanzania by using a firm-level panel data. The regression results revealed that leverage has a positive correlation with tangibility, and tax, as well as negatively correlates to size, firm growth, and risk. The study also revealed that profitability has insignificant effect on composition of capital. For the case of dynamic panel data model, selected unlisted firms were found to adjust towards target capital structure relatively quickly. The magnitude of adjustment coefficient was high of about 67 percent. This implies that selected unlisted firms adjust relatively fast towards the target leverage ratio. The paper add to the frontier of knowledge of the existing body of literature by providing empirical evidence in a Tanzanian setting to the debate of capital gearing ratio. It also provides important policy guidelines for financial management for the firms in Tanzania. Based on these findings, it appears that firm specific-effects determine capital structures of large selected firms in Tanzania.
This paper sought to analyze some of the supposed determinants of profitability for insurance fir... more This paper sought to analyze some of the supposed determinants of profitability for insurance firms in Tanzania. Though the success of insurance companies has been linked to the accessibility of financial services by various scholars, yet the way profitability of companies influence success of firms has not been well explored. To undertake the study 10 insurance companies were involved out of 25 general insurance companies operating in Tanzania for 10 years from 2008 to 2017. The data was obtained from financial statements given on TIRA Report and some of them from documentary review. The paper carried out preliminary test of panel unit root to check for stationarity of variables. The appropriate fixed and random effect model test was employed to determine the fitness of the model using the Hausman specification test. Age of the firm found to be statistically influence profit of a company at 5% level while claims cost found to be statically significant at 1% level. Size of a company...
This study has investigated empirically the causal relationship between money and output in Tanza... more This study has investigated empirically the causal relationship between money and output in Tanzania for the period 1986 to 2018. A VECM was estimated in log-difference and in log-level and Granger causality test undertaken by using annual time series data to test a null hypothesis that money does not Granger cause output either way. The log-difference results rejected the null that money Granger cause output in favour of the alternative hypothesis that output Granger cause money and the effect was unidirectional. The results in this case suggest money supply is endogenous such that monetary policy cannot directly be used in stabilizing the economy over the short-run. Instead the government should rely on fiscal policy rather than monetary policy to attain macroeconomic objectives in general and price stability in particular. Robustness test results from estimation the log-level results suggested the causality was unidirectional from money to output, implying money is exogenously de...
Tanzania, like most other developing countries, faces numerous economic challenges in striving to... more Tanzania, like most other developing countries, faces numerous economic challenges in striving to achieve sustainable economic growth and development through taxation. In the literature, the debate on how effective taxes are as a tool for promoting economic growth and economic development remains inconclusive, as various research have reported mixed effects of tax on economic growth. This article investigates the effect of taxation on economic growth in Tanzania using the recently developed technique of autoregressive distributed lag model (ARDL) bounds testing procedure for the period from 1996 to 2019. Various preliminary tests were conducted including stationary tests as well as the pair-wise Granger causality test. According to the results obtained, domestic goods and services (TGS) taxes are positively related to GDP growth and are statistically significant at 1% level. Income taxes, on the other hand, were found to be negatively related to GDP growth and to be statistically si...
International journal of academic research in business & social sciences, Aug 21, 2018
Tanzania economy like of many other emerging market have seen rapid increase number of banks loca... more Tanzania economy like of many other emerging market have seen rapid increase number of banks locally and foreign owned since financial sector liberalization in 1990's even though clear impact of financial sector on economic growth is hard to be singled out. The paper investigates empirically the long run relationship between selected proxies of financial development and economic growth in the Tanzanian context. Using the vector error correction model (VECM), the study finds that financial development is cointegrated with economic growth. That is there is a long run relationship between chosen proxies of financial development and economic growth in the country. This paper used broad money supply M2, foreign direct investment, customer deposits in foreign and domestic banks, credit extended by foreign and domestic banks as percentage of GDP as proxies for financial development. While per capita growth rate used to measure economic growth. The results also show the need to develop even further the financial sector through appropriate regulatory and macroeconomic policies in order to ensure sustainable economic growth as well as economic development. For robustness of the results other test were also performed in this study such as Augmented-Dickey Fuller unit root test and Johansen cointegration test.
International Journal of Academic Research in Business and Social Sciences, 2020
This paper sought to examine some of the considered determinants of capital structure of large fi... more This paper sought to examine some of the considered determinants of capital structure of large firms in Tanzania. The paper examines the dynamics of capital structure of sampled 85 unlisted firms in Tanzania by using a firm-level panel data. The regression results revealed that leverage has a positive correlation with tangibility, and tax, as well as negatively correlates to size, firm growth, and risk. The study also revealed that profitability has insignificant effect on composition of capital. For the case of dynamic panel data model, selected unlisted firms were found to adjust towards target capital structure relatively quickly. The magnitude of adjustment coefficient was high of about 67 percent. This implies that selected unlisted firms adjust relatively fast towards the target leverage ratio. The paper add to the frontier of knowledge of the existing body of literature by providing empirical evidence in a Tanzanian setting to the debate of capital gearing ratio. It also provides important policy guidelines for financial management for the firms in Tanzania. Based on these findings, it appears that firm specific-effects determine capital structures of large selected firms in Tanzania.
This paper sought to analyze some of the supposed determinants of profitability for insurance fir... more This paper sought to analyze some of the supposed determinants of profitability for insurance firms in Tanzania. Though the success of insurance companies has been linked to the accessibility of financial services by various scholars, yet the way profitability of companies influence success of firms has not been well explored. To undertake the study 10 insurance companies were involved out of 25 general insurance companies operating in Tanzania for 10 years from 2008 to 2017. The data was obtained from financial statements given on TIRA Report and some of them from documentary review. The paper carried out preliminary test of panel unit root to check for stationarity of variables. The appropriate fixed and random effect model test was employed to determine the fitness of the model using the Hausman specification test. Age of the firm found to be statistically influence profit of a company at 5% level while claims cost found to be statically significant at 1% level. Size of a company...
This study has investigated empirically the causal relationship between money and output in Tanza... more This study has investigated empirically the causal relationship between money and output in Tanzania for the period 1986 to 2018. A VECM was estimated in log-difference and in log-level and Granger causality test undertaken by using annual time series data to test a null hypothesis that money does not Granger cause output either way. The log-difference results rejected the null that money Granger cause output in favour of the alternative hypothesis that output Granger cause money and the effect was unidirectional. The results in this case suggest money supply is endogenous such that monetary policy cannot directly be used in stabilizing the economy over the short-run. Instead the government should rely on fiscal policy rather than monetary policy to attain macroeconomic objectives in general and price stability in particular. Robustness test results from estimation the log-level results suggested the causality was unidirectional from money to output, implying money is exogenously de...
Tanzania, like most other developing countries, faces numerous economic challenges in striving to... more Tanzania, like most other developing countries, faces numerous economic challenges in striving to achieve sustainable economic growth and development through taxation. In the literature, the debate on how effective taxes are as a tool for promoting economic growth and economic development remains inconclusive, as various research have reported mixed effects of tax on economic growth. This article investigates the effect of taxation on economic growth in Tanzania using the recently developed technique of autoregressive distributed lag model (ARDL) bounds testing procedure for the period from 1996 to 2019. Various preliminary tests were conducted including stationary tests as well as the pair-wise Granger causality test. According to the results obtained, domestic goods and services (TGS) taxes are positively related to GDP growth and are statistically significant at 1% level. Income taxes, on the other hand, were found to be negatively related to GDP growth and to be statistically si...
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