The Term Structure and Treasury Bill Market Efficiency in Tanzania

There is an increasing trend of the conduct of
monetary policy in developing countries to mirror,
at least on paper, those in developed economies. The
structures in the former economies are not only
different but they are also weak in some areas. One
aspect that came with the liberalization of the
financial markets in Tanzania was changing the
trading of Treasury securities in the primary market
to the auction system which uses discriminatory
prices, rather than a single uniform price, in
allocating securities to bidders. This, however, was
not coupled with development of an organized
secondary market for the Treasury securities.
Consequently, the resulting yield curve and the
efficiency of this market may be expected to be
different from where secondary markets are well
developed. This work provides an initial assessment
of the Treasury bill auction system in Tanzania and
the efficiency of the primary market. It forms
a basis for understanding the term structure of
interest rates in Tanzania and analyzing the yield
curve and the integrity of the auction process.

Autorentext
Ellinami J MINJA is a Lecturer in Finance and Economics at the
University of Dar es Salaam, Tanzania. He holds a Ph.D. in
Economics from Oklahoma State University and also a Certified
Public Accountant (CPA). He has taught at university level since
1991 in a number of universities holding both academic and
administrative positions.