Title:
GEOGRAPHIC DIVERSIFICATION AND EFFICIENCY IN THE BANKING INDUSTRY. DOES BOARD COMPOSITION IN TERMS OF INDEPENDENT DIRECTORS’ MATTER?

Authors:
Katuma Wandwi*, Saganga Kapaya , Bukaza Chachage and Sophia Mbura, Tanzania

Abstract:
This study aimed to investigate the moderating role of board composition in terms of independent directors on the relationship between geographic diversification and efficiency of commercial banks in Tanzania. The research employed balanced panel data from 15 commercial banks in Tanzania from 2012 to 2020. The formulated hypotheses were tested by Tobit Regression Analysis and DEA using STATA version 17. The findings indicated that geographic diversification had a significant and negative relationship with allocative and economic efficiency. The study also revealed that the positive and considerable board composition in terms of independent directors moderated the relationship between geographic diversification and the allocative and economic efficiency of commercial banks. We discovered empirically that moderating the role of independent directors on the relationship between geographic diversification and efficiency contributes to efficiency. Therefore, this study recommend policy makers, management and others regulatory authority to consider independent directors when planning for efficiency of a commercial banks in Tanzania.