Reserch Paper

MZUMBE UNIVERSITY

BUSINESS SCHOOL

A proposal on

A comparative analysis of financial performance of commercial banks.

NAME: Jafar

CHAPTER ONE

1.0 INTRODUCTION

This chapter provides a summary on background information that leads to the research problem, research objectives, significance of the study, definition of terms, justification of the study as well as conceptual framework.

1.1 BACKGROUND INFORMATION

Bank is an important instrument to the success of the economy by bringing together the surplus spending and deficit spending unit as the means of satisfying the two, It acts as an intermediaries by transferring funds from the surplus spending unit such as households, government, and business unit.Normaly this financial system lead to the growth of the economy ( Baisi 2005)

The banking system shift funds either directly or indirectly from the savers (surplus spending unit to deficit spending unit (users)

Baisi (2005)

With direct placement, there is no financial intermediation process as the users (deficit spending unit) get funds directly from the savers. With the indirect placements, the financial markets play the role of financial intermediation whereby they act as a link between the users (deficit spending unit) and the savers (surplus spending unit). There is no direct contact between the savers and the users. The surplus spending unit places their deposits with the different financial markets which then package them and provide different credit and other financial facilities to the deficit spending unit. On getting funds the deficit spending unit pledge securities to the financial institutions. The repayment are channeled though banks. (ibid)

The evolution of the banks in Tanzania is categorized into five sections, during the Germany rule, British rule, Post independence before arusha declaration, post Arusha

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