Governance and Management Reforms in Banking Sector: Impacts on Service Quality in Tanzanian Commercial Banks

Abstract

This paper examines critically the impact of governance and management reforms in Tanzanian banking sector on service quality of commercial banks. The study adopted qualitative method for data collection. Data were collected from bank customers and bank officials from thirty two commercial banks in Tanzania that were already registered by the Bank of Tanzania at the end year 2010. A self-administered questionnaires were distributed to 1600 customers and 184 bank officials. Of these, 893(60%) bank customers and 81(44%) bank officials responded. Data were analysed using SPSS 17.0 to estimate the mean scores, standard deviation and association between reforms in governance and management and service quality. Study findings reveal that despite of the reforms on governance and management banks still do not have customer based policies, private banks  having Mean(SD) Scores [(2.71(1.136) vs. 2.59(1.019), p= 0.142) as per customer perception and [(3.30(1.205) vs. 3.12(1.333), p= 0.542)as per bank official perception. This was also confirmed by the results of the hypothesis tests which confirmed that there is negative relationship between reforms on governance and banks having customer focused policies (P=0.240: > 0.05, P=0.323 >0.05).The study also show that banks still offer same products that do not meet variety of needs of their customers, semi quasi banks being ahead of private banks with Mean (SD) scores [(2.68(1.138) vs. 2.65(1.062), p= 0.721)] .These results are confirmed by hypothesis tests that there is negative relationship between reforms in governance and management  and banks having different products that meet variety needs of customer (P=0.695: > 0.05). Findings also show that banks do not have specific products that address the needs of SME’s. Semi-quasi banks had higher mean (SD) scores than private banks [(2.94(1.074) vs. 2.80(1.101), p= 0.120)] respectively. These results are confirmed by hypothesis tests that there is negative relationship between reforms on governance and management and banks having different products that meet the needs of SME’s. (P=0.109: > 0.05).Also the findings show that banks do not have products that address the needs of all genders, semi-quasi banks have higher mean (SD) scores than private banks [(2.62(1.203) vs. 2.56(1.230), p= 0.573)] respectively. This is also confirmed by hypothesis results that there is negative relationship between reforms on governance and management and banks having products that address needs of all genders (P=0.403, P.>0.105). Overall, financial sector reforms in governance and management has less impact on service quality of commercial banks in Tanzania.

Keywords: Financial sector Reforms, Commercial Banks, Governance and Management Reforms.  Service Quality