The influence pathway of internal audit attributes on credit risk management in emerging economies: evidence from Tanzania

Purpose This study investigates how internal audit function (IAF) attributes, namely competence, independence, and leadership, influence credit risk management (CRM) in Tanzanian commercial banks, focussing on the mediating role of the IAF's sphere of influence. Design/methodology/approach Data were collected from 131 relevant employees across all 34 licenced commercial banks in Tanzania. A cross-sectional survey design was applied, and partial least squares structural equation modelling (PLS-SEM) was used to test direct and mediated relationships. Findings Results show that IAF competence and independence significantly enhance CRM both directly and indirectly through the sphere of influence, while the relationship between leadership and CRM is fully mediated by the sphere of influence. Moreover, the sphere of influence exerts a significant positive effect on CRM, underscoring the importance of organisational influence in translating audit insights into effective risk governance. Practical implications The findings suggest that banks in emerging economies should reinforce auditor independence and competence while fostering organisational cultures that empower internal audit functions. Regulators are also encouraged to refine their supervisory frameworks to emphasise the institutional role of internal audits in risk oversight. Originality/value This study extends internal auditing research by conceptualising and validating the sphere of influence as the mechanism through which IAF attributes affect CRM. By integrating Agency Theory and Role Theory into a unified capacity–conversion framework, in which audit attributes create monitoring capacity and organisational influence converts it into governance outcomes, it offers new evidence from an emerging economy and advances understanding of how internal audit creates governance value through risk oversight in developing banking systems.

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Publication Details

Journal
Journal of Accounting in Emerging Economies
Published
2026-10-30
DOI
https://doi.org/10.1108/jaee-08-2025-0489
Primary Topic
Auditing, Earnings Management, Governance
Type
article
Field-Weighted Citation Impact
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article

The influence pathway of internal audit attributes on credit risk management in emerging economies: evidence from Tanzania

Emmanuel Christopher
Journal of Accounting in Emerging Economies
Auditing, Earnings Management, Governance
article

The influence pathway of internal audit attributes on credit risk management in emerging economies: evidence from Tanzania

Emmanuel Christopher
article en

Abstract

Purpose This study investigates how internal audit function (IAF) attributes, namely competence, independence, and leadership, influence credit risk management (CRM) in Tanzanian commercial banks, focussing on the mediating role of the IAF's sphere of influence. Design/methodology/approach Data were collected from 131 relevant employees across all 34 licenced commercial banks in Tanzania. A cross-sectional survey design was applied, and partial least squares structural equation modelling (PLS-SEM) was used to test direct and mediated relationships. Findings Results show that IAF competence and independence significantly enhance CRM both directly and indirectly through the sphere of influence, while the relationship between leadership and CRM is fully mediated by the sphere of influence. Moreover, the sphere of influence exerts a significant positive effect on CRM, underscoring the importance of organisational influence in translating audit insights into effective risk governance. Practical implications The findings suggest that banks in emerging economies should reinforce auditor independence and competence while fostering organisational cultures that empower internal audit functions. Regulators are also encouraged to refine their supervisory frameworks to emphasise the institutional role of internal audits in risk oversight. Originality/value This study extends internal auditing research by conceptualising and validating the sphere of influence as the mechanism through which IAF attributes affect CRM. By integrating Agency Theory and Role Theory into a unified capacity–conversion framework, in which audit attributes create monitoring capacity and organisational influence converts it into governance outcomes, it offers new evidence from an emerging economy and advances understanding of how internal audit creates governance value through risk oversight in developing banking systems.

Journal of Accounting in Emerging Economies
University of Dar es Salaam (TZ)
Peace, justice, and strong institutions
Openalex Percentile: Top 4%
Auditing, Earnings Management, Governance
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