Financial technology and credit risk management: the case of non-performing loans in Tanzanian banks
The evolution of financial technology (FinTech) globally is reshaping the banking system, including Tanzania’s financial sector. This study examines the influence of FinTech on Tanzania’s banking sector, particularly its impact on non-performing loans. Using a financial technology index alongside ba...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2025-12-01
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| Series: | Cogent Economics & Finance |
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| Online Access: | https://www.tandfonline.com/doi/10.1080/23322039.2025.2459188 |
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| author | Omary Juma Ally Yusuph J. Kulindwa Lucas Mataba |
| author_facet | Omary Juma Ally Yusuph J. Kulindwa Lucas Mataba |
| author_sort | Omary Juma Ally |
| collection | DOAJ |
| description | The evolution of financial technology (FinTech) globally is reshaping the banking system, including Tanzania’s financial sector. This study examines the influence of FinTech on Tanzania’s banking sector, particularly its impact on non-performing loans. Using a financial technology index alongside bank-specific and macroeconomic variables, the analysis covers data from 30 Tanzanian commercial banks spanning 2010 to 2021. Employing a two-step system, a Generalized Method of Moments, the study tests the hypotheses and provides robust findings. The results reveal that FinTech significantly reduces non-performing loans across all bank categories, with the strongest effects observed in small banks, followed by medium and large banks. This indicates that advancements in FinTech improve credit risk management and reduce loan default rates. Conversely, a cost-to-income ratio and a high loan-to-deposit ratio increase non-performing loans, particularly in medium-sized banks. These findings have critical implications for policymakers and practitioners. Policymakers should prioritize fostering a supportive regulatory environment to encourage FinTech integration, particularly among small and medium banks. Bank managers are encouraged to leverage FinTech innovations to enhance credit risk management and operational efficiency. The study highlights the transformative potential of FinTech in managing credit risk and driving sustainable growth in Tanzania’s banking sector. |
| format | Article |
| id | doaj-art-0cd06ad8a04e46a3b91598229183f2d8 |
| institution | Kabale University |
| issn | 2332-2039 |
| language | English |
| publishDate | 2025-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Economics & Finance |
| spelling | doaj-art-0cd06ad8a04e46a3b91598229183f2d82025-02-07T05:40:59ZengTaylor & Francis GroupCogent Economics & Finance2332-20392025-12-0113110.1080/23322039.2025.2459188Financial technology and credit risk management: the case of non-performing loans in Tanzanian banksOmary Juma Ally0Yusuph J. Kulindwa1Lucas Mataba2Department of Academic, Research and Consultancy, Bank of Tanzania Academy, Mwanza, TanzaniaMoshi Co-operative University, Moshi, TanzaniaMoshi Co-operative University, Moshi, TanzaniaThe evolution of financial technology (FinTech) globally is reshaping the banking system, including Tanzania’s financial sector. This study examines the influence of FinTech on Tanzania’s banking sector, particularly its impact on non-performing loans. Using a financial technology index alongside bank-specific and macroeconomic variables, the analysis covers data from 30 Tanzanian commercial banks spanning 2010 to 2021. Employing a two-step system, a Generalized Method of Moments, the study tests the hypotheses and provides robust findings. The results reveal that FinTech significantly reduces non-performing loans across all bank categories, with the strongest effects observed in small banks, followed by medium and large banks. This indicates that advancements in FinTech improve credit risk management and reduce loan default rates. Conversely, a cost-to-income ratio and a high loan-to-deposit ratio increase non-performing loans, particularly in medium-sized banks. These findings have critical implications for policymakers and practitioners. Policymakers should prioritize fostering a supportive regulatory environment to encourage FinTech integration, particularly among small and medium banks. Bank managers are encouraged to leverage FinTech innovations to enhance credit risk management and operational efficiency. The study highlights the transformative potential of FinTech in managing credit risk and driving sustainable growth in Tanzania’s banking sector.https://www.tandfonline.com/doi/10.1080/23322039.2025.2459188FinTechFinTech indexnon-performing loanscommercial bankFinanceCredit & Credit Institutions |
| spellingShingle | Omary Juma Ally Yusuph J. Kulindwa Lucas Mataba Financial technology and credit risk management: the case of non-performing loans in Tanzanian banks Cogent Economics & Finance FinTech FinTech index non-performing loans commercial bank Finance Credit & Credit Institutions |
| title | Financial technology and credit risk management: the case of non-performing loans in Tanzanian banks |
| title_full | Financial technology and credit risk management: the case of non-performing loans in Tanzanian banks |
| title_fullStr | Financial technology and credit risk management: the case of non-performing loans in Tanzanian banks |
| title_full_unstemmed | Financial technology and credit risk management: the case of non-performing loans in Tanzanian banks |
| title_short | Financial technology and credit risk management: the case of non-performing loans in Tanzanian banks |
| title_sort | financial technology and credit risk management the case of non performing loans in tanzanian banks |
| topic | FinTech FinTech index non-performing loans commercial bank Finance Credit & Credit Institutions |
| url | https://www.tandfonline.com/doi/10.1080/23322039.2025.2459188 |
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