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Empirical analysis on the impact of market share and capital adequacy ratio on the bankruptcy rate of community banks in Tanzania: an application of Altman’s Z-Score model

Author

Listed:
  • Hapho Yohana

    (Dep. of Accounting and Finance, Faculty of Business Management, The Open University of Tanzania, Dar es Salaam, Tanzania)

  • Gwahula Raphael

    (Dep. of Accounting and Finance, Faculty of Business Management, The Open University of Tanzania, Dar es Salaam, Tanzania)

  • Saganga Kapaya

    (Dep. of Accounting and Finance, Faculty of Business Management, The Open University of Tanzania, Dar es Salaam, Tanzania)

Abstract

This paper examines the impact of market share and capital adequacy on the bankruptcy rate of community banks in Tanzania, for the period spanned for 16 years from 2006 to 2021. For instance, recently in Tanzania, seven community banks were closed by the Regulator while others were being merged to increase their going concern and operational efficiency. This study has employed a quantitative approach based on secondary data collected from the Bank of Tanzania as a Regulator and some of them were gathered from community banks. The sample size is 11 community banks, with a total of 176 observations. The panel data analysis has been conducted using statistical software, namely, STATA version 17 with the random effect model being used to generate regression results ready for interpretation. The research findings depicted significant positive correlations between bankruptcy rates as computed using Altman’s Z-score model and the independent variables, namely, market share and capital adequacy ratio. In that regard, the study recommends adequate capital levels and market share to reduce the bankruptcy rates of community banks in Tanzania. Key Words:Market Share, Capital Adequacy, Bankruptcy Rate and the Altman’s Z-Score Model

Suggested Citation

  • Hapho Yohana & Gwahula Raphael & Saganga Kapaya, 2023. "Empirical analysis on the impact of market share and capital adequacy ratio on the bankruptcy rate of community banks in Tanzania: an application of Altman’s Z-Score model," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 12(8), pages 215-226, November.
    • Handle: RePEc:rbs:ijbrss:v:12:y:2023:i:8:p:215-226
    DOI: 10.20525/ijrbs.v12i8.2933
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