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Pursuing efficiency while maintaining outreach : bank privatization in Tanzania, Volume 1
 
Author:Cull, Robert; Spreng, Connor P.; Collection Title:Policy Research working paper ; no. WPS 4804
Country:World; Tanzania; Date Stored:2008/12/30
Document Date:2008/12/01Document Type:Policy Research Working Paper
SubTopics:Bankruptcy and Resolution of Financial Distress; Access to Finance; Banks & Banking Reform; Debt Markets; Language:English
Major Sector:FinanceRel. Proj ID:1W-Program Research Proposal In Finance -- -- P107616;
Region:The World Region; AfricaReport Number:WPS4804
Sub Sectors:General finance sectorVolume No:1

Summary: 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 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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