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Credit risk management system of a commercial bank in Tanzania

Evelyn Richard (Faculty of Commerce and Management, University of Dar es Salaam, Dar es Salaam, Tanzania)
Marcellina Chijoriga (Faculty of Commerce and Management, University of Dar es Salaam, Dar es Salaam, Tanzania)
Erasmus Kaijage (Faculty of Commerce and Management, University of Dar es Salaam, Dar es Salaam, Tanzania)
Christer Peterson (Luleå University of Technology, Luleå, Sweden)
Hakan Bohman (Umeå School of Business, Umeå, Sweden)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 2 July 2008

Abstract

Purpose

The purpose of this paper is to develop a conceptual model to be used further in understanding credit risk management (CRM) system of commercial banks (CBs) in an economy with less developed financial sector.

Design/methodology/approach

The paper reviews existing literature that consists mostly evidence from developed countries. A study model is proposed with amendment to fit Tanzania's environment. This is achieved through the use of both secondary (various relevant documents) and primary (interviews) information from a CB and key management officials dealing with credit management. The selected CB is active in lending, has both foreign and local characteristics in its operations and has been in operation for a relatively longer period.

Findings

The main finding of this paper is that the components of CRM system differ in CBs operating in a less developed economy from those in a developed economy. This implies that the environment within which the bank operates is an important consideration for a CRM system to be successful.

Originality/value

Tanzania, a less developed economy, provides an excellent case for studying how CBs operating in economies with less developed financial sector manage their credit risk. The paper identifies issues to be studied further in order to establish a CRM system by CBs operating in Tanzania.

Keywords

Citation

Richard, E., Chijoriga, M., Kaijage, E., Peterson, C. and Bohman, H. (2008), "Credit risk management system of a commercial bank in Tanzania", International Journal of Emerging Markets, Vol. 3 No. 3, pp. 323-332. https://doi.org/10.1108/17468800810883729

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited