Influence of Financial Reporting Quality on Bank Performance in Tanzania

Abstract

This paper explores how Financial Reporting Quality (FRQ) affects the performance of banks in Tanzania. The analysis centres on three key reporting attributes relevant information, financial reporting reliability and financial report clarity drawing on principles from Decision Usefulness Theory. The study uses information collected from 30 commercial banks, combining survey feedback with data extracted from their 2023 audited financial statements.
Multiple regression analysis was employed in examining the relationship between FRQ and BP. Findings reveal that relevant information, financial reporting reliability and financial report clarity have positively affect the performance of banks. This suggests that when financial information is timely, credible, and relevant, overall bank performance improves. The study further recommends that the Bank of Tanzania, through the Banking and Financial Institutions (Disclosure) Regulations of 2014, strengthen voluntary disclosure requirements for unlisted banks as a way to support better performance across the sector.

Keywords: Financial Reporting Quality, Bank Performance, Relevant information, Financial Reporting Reliability, Financial Report Clarity, Return on Equity