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JOURNAL OF MANAGEMENT POLICY AND PRACTICE
Factors That Cause Non– Performing Loans in Commercial Banks in
Tanzania and Strategies to Resolve Them
Author(s): Evelyn Richard
Citation: Evelyn Richard, (2011) "Factors That Cause Non– Performing Loans in Commercial Banks in
Tanzania and Strategies to Resolve Them" Journal of Management Policy and Practice, Vol. 12, Iss. 7, pp. 50 - 58
Article Type: Research paper
Publisher: North American Business Press
Abstract:
This paper reports reasons for non performing loans (NPLs) in commercial banks(CBs) in Tanzania and
strategies employed in dealing with NPLs. A semi-structured questionnaire was administered face to face
to 48 bank officers from 14 CBs that provide corporate loans and had been in operations for at least five
years. Bank officers participated were those involved in lending activities for at least five years. Findings
suggest that use of funds for purposes different from agreed ones as a major factor that cause NPLs.
Creating an environment to make banks seen as problem solvers and trusted advisor to borrowers was
cited as the main strategy towards solving NPLs problems.Findings imply that close monitoring of
borrowers is critical to lending business.
