The Role of Commercial Banks in the Performance of Small Medium Enterprise Businesses in Tanzania A Case of Kigamboni District

Abstract

This study examined the role played by commercial banks in the success of micro and small enterprises, driven by three main objectives. Firstly, it aimed to assess the quality of services provided by commercial banks to small and medium-sized enterprises (SMEs) in Kigamboni District. Secondly, it sought to analyze the impact of commercial bank loans on small and medium-sized enterprises (SMEs) in Tanzania's Kigamboni District. Lastly, the study aimed to investigate how commercial banks' support services influenced the performance of SMEs in the same region.The research utilized a cross-sectional design and a quantitative methodology, focusing on small and medium-sized enterprises (SMEs) in Kigamboni District, Tanzania. A total of 385 SME business owners and executives participated in the survey. Respondents completed a questionnaire to provide the necessary information. The collected data was analyzed using descriptive statistics and multiple regression analysis. The findings of the study revealed that efficient banking operations, loan services, and business support services were all positive and significant predictors of SMEs' performance. As a result, the study recommends that banks ensure the affordability of financial services, make banking services easily accessible, and ensure the timely delivery of banking services to SMEs in order to enhance their performance. Additionally, the government should institute efforts through special programs aimed at improving SMEs' access to finance. Furthermore, banking services and government programs should focus on providing financial, business, and managerial support to SMEs to streamline their operations and, in turn, boost their performance. Future studies are encouraged to conduct similar research on the impact of NGOs and government business programs on enhancing the performance of SMEs in Tanzania.