The Role of Commercial Banks in the Performance of SMEs in Kigamboni District, Tanzania

Abstract

The fact that small and medium enterprises (SMEs) depend much on the availability of financial and other services from financial institutions such as commercial banks in order to grow and succeed is un-deniable. This study assessed role of commercial bank in the perfor-mance of SMEs in Kigamboni District, Tanzania. The study was guided by two specific objectives. The first one was to evaluate the extent commercial bank services have been used by SMEs in Kigamboni Dis-trict, and the second specific objective was to determine the impact of commercial banks’ services namely account payable solutions, busi-ness loans and business support services on performance of SMEs. The study adopted a cross-sectional survey research design where quantitative approach was utilised. A sample of 385 SMEs owners and managers was selected among. Data was collected through a ques-tionnaire which was administered to the respondents. The collected data was analysed through descriptive statistics and multiple regres-sion analysis. Findings of the study revealed that account payable so-lutions, business loan services and business support services have positive and statistically significant impact on performance of SMEs. Based on the findings it was concluded that commercial bank services are crucial for the performance of SMEs. Thus, this study recommends that banks should make sure, the costs of financial services are afford-able, the banking services are conveniently obtained and there is time-ly delivery of the banking services to the SMEs to enhance their per-formance.