Comparative Analysis Of Local And International Credit Rating Assessments Of Tanzanian Commercial Banks

ABSTRACT

Credit rating assessment to entities, such as commercial banks in Tanzania, is still

under the infant stage. This study made a comparative analysis of local and

international credit rating assessments of Tanzanian commercial banks. It adopted

time series research design in measuring the variables in ratios, data covered

published secondary quarterly financial report from 2009-2019. The study also made

40 observations from each bank based on CRDB and NMB commercial banks to

analyze the rating assessment.

The analysis revealed that, in credit assessments, Tanzanian commercial banks of

NMB and CRDB are likely to suffer significantly from capital adequacy,

management quality, earning capability and liquidity. The study further findings

showed that the Tanzanian regulatory system (locally) considerers lower standards as

compared to international standards. CRDB and NMB combined had satisfactory

outlook rating scores that signified fundamentally soundness with modest amendable

weakness (rating average of „2‟). However, NMB appeared to be better in ratings

than CRDB in the period of 10-years analyzed quarterly.

The study recommends local systems to consider the establishment of sophisticated

standards to indicators in credit rating assessments, such as management competence

and earning capability since they significantly affect the credit rating assessments

with reference from international standards to upgrade and improve the position of

the credit rating scores to Tanzanian commercial banks given the unstable

economies.