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Pursuing efficiency while maintaining outreach: Bank privatization in Tanzania

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  • Cull, Robert
  • Spreng, Connor P.

Abstract

Profitability improvements after the privatization of a large state-owned bank might come at the expense of reduced access to financial services for some groups, especially the rural poor. The privatization of Tanzania's National Bank of Commerce provides a unique episode for studying this issue. The bank was split into the "new" National Bank of Commerce, a commercial bank that assumed most of the original bank's assets and liabilities, and the National Microfinance Bank, which assumed most of the branch network and the mandate to foster access to financial services. The new National Bank of Commerce's profitability and portfolio quality improved although credit growth was slow, in line with the privatization experiences in other developing countries. Finding a buyer for the National Microfinance Bank proved very difficult, although after years under contract management by private banking consultants, Rabobank of the Netherlands emerged as a purchaser. Profitability has since improved and lending has slowly grown, while the share of non-performing loans remains low.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 94 (2011)
Issue (Month): 2 (March)
Pages: 254-261

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Handle: RePEc:eee:deveco:v:94:y:2011:i:2:p:254-261

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Web page: http://www.elsevier.com/locate/devec

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Keywords: Bank privatization Tanzania Africa Access to finance;

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References

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  1. Barth, James R. & Caprio Jr., Gerard & Levine, Ross, 2001. "Bank regulation and supervision : what works best?," Policy Research Working Paper Series 2725, The World Bank.
  2. Megginson, William L., 2005. "The economics of bank privatization," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 1931-1980, August.
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Citations

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Cited by:
  1. Brissimis, Sophocles N. & Delis, Manthos D., 2011. "Bank-level estimates of market power," European Journal of Operational Research, Elsevier, vol. 212(3), pages 508-517, August.
  2. Clarke, George R.G. & Cull, Robert & Fuchs, Michael, 2007. "Bank privatization in Sub-Saharan Africa : the case of Uganda commercial bank," Policy Research Working Paper Series 4407, The World Bank.
  3. Beck, Thorsten & Cull, Robert, 2013. "Banking in Africa," Policy Research Working Paper Series 6684, The World Bank.

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