Credit Risk and Commercial Banks Performance in Tanzania: a Panel Data Analysis

Abstract

The study was meant to find the relationship between the credit risk and bank performance as measured by return on asset. Regression model was used to develop the relationship between the indicators of credit risk and bank performance, the credit risk indicators have produced negative correlation which indicate the higher the credit risk the lower the bank performance. Regression model was statistically fit producing R square and adjusted R square of 70% and 64% respectively. The study recommends the bank understudy to increase the capital reserve to protect the bank for the future losses and to increase bank credit risk management techniques.

Keywords: credit risk, performance, regression.