S z research article

 
Independent Variables - Macroeconomic Variables:  
Macroeconomic variables are country wide factors that are 
beyond the company ability that 
prevail in the economy where 
the commercial banks operate 
(Ongore, 2013). The following 
are independent variables. 
GDP Growth (Annual %): GDP is the sum of gross value 
added by all resident producers in the economy plus any 
product taxes and minus any subsidies not included in the 
value of the products (World development indicators, 2012). 
The research employs the annual growth rate of Tanzania’s 
GDP in percentage from 2011 to 2019. 
Inflation: Inflation is the rise of general price of goods and 
services for the specified period. It is measured by using the 
consumer price index (World development indicators, 2012). 
 
Exchange Rate: Exchange rate refers to the charge that used 
to exchange one currency from another and it is determined by 
the international money market where the market forces 
operate (World development indicators, 2012). 
 
Interest Rate: This is the cost of loan that incurred by the 
borrower for the received loans from lenders for the borrowed 
money Nyabakora, W, et al. (2020) that is determined by 
banking sector.
 
Government Debt: 
In the long run, debt holders charge high 
interest due to the debt to GDP ratio increases to the extent of 
12406 International Journal of Current Research, Vol. 12, Issue, 06, pp.12404-12409, June, 2020
 

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claiming the compensation for the marginal risk they won't be 
repaid. This increase on interest rates results to slow the 
economic growth. Supporting the above notion, 
Eze, 
Onyebuchi Michael; Nweke, Abraham Mbam, and Atuma 
Emeka (2019) assert that, the government debt has negative 
effect on the economic performance.