Title:
AN EMPIRICAL ANALYSIS ON THE IMPACT OF ECONOMIES OF SCALE AND COMPETITION LEVEL ON BANKRUPTCY RATE OF COMMUNITY BANKS IN TANZANIA. A RANDOM EFFECT MODEL APPROACH

Authors:
Hapho Yohana and Dr. Saganga Kapaya, Tanzania

Abstract:
This paper analyses the impact of economies of scale and competition level on bankruptcy rates of community banks for the period ranging from 2006 to 2021. The explanatory variables employed in this study are competition level and economies of scale, while the dependent variable is the bankruptcy rate of community banks. The research approach is quantitative and the research strategy is based on secondary data collection from published financial statements of community banks and Bank of Tanzania reports. The employed sample size is 11 community banks, with total number of 176 observations. The study employed a purposive sampling approach as the basis for sample selection in order to obtain a sample that fit the research objective. The data was analysed using both descriptive and inferential for hypothesis testing, and the model was evaluated using structural equation modelling and panel technique analysis (Shone, 2015). Due to its reliability, the study has applied random effect model versus fixed effect model to generate regression results. The findings indicated significant negative correlations between the explanatory and dependent variables.