The Role of Commercial Bank Practices on the Performance of Small and Medium Enterprises in Tanzania – A case of selected Commercial Banks in Dar es Salaam

Abstract

Abstract

This study examined the role of commercial banks practices on the performance of Small and Medium Enterprises in Dar es Salaam. The study specifically focused on assessing the influence of credit services, trade finance services, foreign exchange services and omnichannel services on the performance of SMEs. The study was conducted by focusing on the commercial banks operating in Dar es Salaam. A mixed research method was involved where both quantitative and qualitative data were collected and analyzed. A sample of 150 staff of the commercial banks was selected to take part in the study. The analysis of the collected quantitative data was analyzed through descriptive statistics and multiple regressions to establish the relationship between variables. The qualitative data was analyzed based on the thematic analysis technique. The findings of the study revealed that all the four independent variables, credit services, trade finance, foreign exchange and omnichannel services have a significant influence on the performance of Small and Medium Enterprises. Therefore, the study concludes that the commercial banks` practices such as credit services, trade finance, foreign exchange and omnichannel services play a significant impact on the performance of SMEs. Thus, the study recommends that commercial banks should make sure they reduce or remove all the barriers to SMEs access to finance. The barriers include but are not limited to high-interest rates, high collateral requirements, credit rationing and inconveniences in accessing credit services. It is also recommended that commercial banks should make sure they provide convenient banking services especially by adopting modern technologies such as electronic banking and electronic commerce to make sure the banking services to SMEs are not disrupted.

Keywords: Credit services, Trade finance, Foreign exchange, Omnichannel services and Performance of SMEs