Financial Institutions and Services
Abstract
The study sought to analyse the factors that lead to rising credit risk in the Zimbabwean
banking sector. The objective was to ascertain the impact of macroeconomic, industry and bank
specific factors on rising credit risk in in Zimbabwe. The study aimed at contributing to credit risk
management literature by providing evidence Sub Saharan context. Being anchored on the positivist
quantitative research approach, a survey was carried out gather the data that were analysed using
descriptive, correlation and regression analyses. The results revealed that the most significant factors
leading to credit risk in the Zimbabwean banking sector were macroeconomic and bank specific
factors. The industry factors did not show a significant influence on the rising credit risk. The
research findings of this study will a valuable addition to the existing knowledge and provide a
platform for further research on how the credit risk problems can be dealt with. While credit risk is
known as one of the risks inherent to any banking institutions, the alarming levels of credit risk in the
Zimbabwe banking sector has motivated this current study to critically analyse the factors that have
led to the high credit risk levels.
References
Aginer, D., Demirguc-Kunt, A. & Zhu, M. (2012). How Does Banking Competition Affect
Systematic Stability?The World Bank, Development Reserach Group, Finance and Private Sector
Development. Research Working Paper 5981.
Al-Smadi, M.O. & Ahmad, N.H. (2009). Factors affecting bank's credit risk: Evidence form Jordan in
Indian State Owned Banks. College of Business, University Utara Malaysia.
Auronen, L. (2003). Assymeteric Information: Theory and Applications. Seminar of Strategy and
International Business, Helsinki University of Technology.
Aver, B. (2008). An empirical analysisof Credit risk factors of the Slovenian Banking Sector.
Managing Global Transition, vol. 6, no. 3, pp. 317-334.
Bofondi, M. and Gobbi, G. (2003). Bad Loans and Entry in Local Credit Markets. Bank of Italy
Research Department, Rome.
Das, A. and Ghosh, S. (2007). Determinants of Credit Risk in Indian State-owned Banks: An
Empirical Investigation. Economic Issues, vol. 12, no. 2, pp. 48-66.
Derbali, A. (2011). Determinants of Banking Profitabilty, Before and During the Financial Xrisis of
2007: The Vase of Tunisian Banks. Intredisciplinary Journal of Contemporary Reseach in Business,
vol. 3, pp. 1256-1269.
Dermirguc-Kunt, A. & Huizinga, H. (1998). Determinants of Commercial Bank Interest Marginns
and Profitability: Some Internantional Evidence. Policy Research Working Paper No. 1900.
Dietrich, A. & Wanzenried, G. (2009). What Determines the Profitability of Commercial Banks? New
Evidence from Swaziland.
Garcia-Herrero, A. (2006). What Explains Low Profitability of Chinese Banks?. Working Paper No.
30, The American University of Paris.
Garr, D.K. (2013). Determinants of Credit Risk in t the Banking Industry of Ghana. Developing
Country Studies, vol. 3, no. 11.
Igan, D. & Pinheiro, M. (2011). Credit Growth and Bank Soundness. IMF Working Papers
WP/11/278, pp. 4-8.
Jappelli, T. & Pagano, M. (1999). Information Sharing Lendig and Defaults. Journal of Finance, vol.
43, no. 5, pp. 1693-1718.
Jappelli, T. & Pagano, M. (2000). Information Sharing in Credit Markets: The European Experience.
University of Salerno: CSEF Working Paper No. 35.
Jensen, M. and Meckling, W. (1976). Theory of the Firm: Management Behaviour, Agency Cost and
Ownership Structure. Journal of Financial Economics, vol. 3, no. 4, pp. 305-360.
Jimenez, G. & Saurina, J. (2006). Credit Cycles, Credit Risk and Prudential Regulation. International
Journal of Central Banking, vol. 2, pp. 65-98.
Kithinji, A.M. (2010). Credit Risk Management and Profitability of Commercial Banks in Kenya.
Louzis, D.P., Vouldis, A.T. and Metaxas, V.L. (2010). Macroeconomic and bank-specific
determinants of non-performing loans in Greece: a comparative study of mortgage, business and
consumer loan portfolios. Bank of Greece.
Maudos, J. & de Guevara, J.F. (2004). Factors Explaining the Interest NMargin in Banking Sectors of
European Union. Journal of Banking and Finance, pp. 2259-2281.
Mendoza, E.G. & Terrones, M. (2008). An Anatomy of Credit Booms: Evidence from Macro
Appregates and Micro Data. IMF Working Paper No. 08/226.
Merrouche, O. & Nier, E. (2010). What Caused the Global Financial Crisis- Evidence on the drivers
of Financial Imbalance 1999-2000. IMF Working Paper.
Musyoki, D. (2011). The Imapct of Credit Risk Management on the Financial Performance of Banks
in Kenya. Journal of Business and Public Management, vol. 2, no. 2, pp. 72-80.
Mwaura, I.G. (2013). The Determinants of Credit Risk in Commercial Banks in Kenya. University of
Nairobi.
Ngugi, R.W. (2001). An Empirical Analyis of Interest Rate Spread in Kenya. African Economic
Consortium, Research Paper 106.
Petersen, M.A. and Raghuram, G.R. (1994). The Benefits of Lending Relationships: Evidence from
Small Business Data. Journal of Finance, vol. 49, p. 3.
Ramlall, I. (2009). Bank Specific, Industry Specific and Macroeconomic Determinants of Profitability
in Taiwanese Banking System: Under Panel Data Estimation. International Reserach Journal of
Finance and Economics.
Richard , E. (2011). Factors thatCause Non-Performing Loans in Commercial Banks in Tanzania and
Strategies to Resolve Them. Journal of Management Policy and Practise, vol. 12, no. 7.
Saunders, A. & Cornett, M.M. (2008). Financial Institutions Management. Financial Institutions
Management, 6th edition, McGraw-Hill.
Saunders, M., Lewis, P. & Thornhill, A. (2009). Reserach Methods for Business Students, 5th Edition.
Harlow: FT Prentice Hall.
Stern, G. and Feldman, R. (2004) 'Too Big to Fail: The Hazards of Banks Bailouts ', The Brookings
Institution, Washington DC.
Tamirisa, N.T. & Igan, D.O. (2007). Credit Growth and Bank Soundness in Emerging Europe. IMF
Working Paper 2007, pp. 2-7.
Tamirisa, N.T. & Igan, D.O. (2007). Credit Growth and Bank Soundness in Emerging Europe. IMF
Working Paper 2007, pp. 2-7.
Tennant, D. & Folawewo, A. (2009). Macroeconomic and Market Determinants of Banking Sector
Interest Rate Spreads. Empirical Evidence from Low and Middle Income Coutries. Applied Financial
Economics, vol. 19, no. 6, pp. 489-507.
Systematic Stability?The World Bank, Development Reserach Group, Finance and Private Sector
Development. Research Working Paper 5981.
Al-Smadi, M.O. & Ahmad, N.H. (2009). Factors affecting bank's credit risk: Evidence form Jordan in
Indian State Owned Banks. College of Business, University Utara Malaysia.
Auronen, L. (2003). Assymeteric Information: Theory and Applications. Seminar of Strategy and
International Business, Helsinki University of Technology.
Aver, B. (2008). An empirical analysisof Credit risk factors of the Slovenian Banking Sector.
Managing Global Transition, vol. 6, no. 3, pp. 317-334.
Bofondi, M. and Gobbi, G. (2003). Bad Loans and Entry in Local Credit Markets. Bank of Italy
Research Department, Rome.
Das, A. and Ghosh, S. (2007). Determinants of Credit Risk in Indian State-owned Banks: An
Empirical Investigation. Economic Issues, vol. 12, no. 2, pp. 48-66.
Derbali, A. (2011). Determinants of Banking Profitabilty, Before and During the Financial Xrisis of
2007: The Vase of Tunisian Banks. Intredisciplinary Journal of Contemporary Reseach in Business,
vol. 3, pp. 1256-1269.
Dermirguc-Kunt, A. & Huizinga, H. (1998). Determinants of Commercial Bank Interest Marginns
and Profitability: Some Internantional Evidence. Policy Research Working Paper No. 1900.
Dietrich, A. & Wanzenried, G. (2009). What Determines the Profitability of Commercial Banks? New
Evidence from Swaziland.
Garcia-Herrero, A. (2006). What Explains Low Profitability of Chinese Banks?. Working Paper No.
30, The American University of Paris.
Garr, D.K. (2013). Determinants of Credit Risk in t the Banking Industry of Ghana. Developing
Country Studies, vol. 3, no. 11.
Igan, D. & Pinheiro, M. (2011). Credit Growth and Bank Soundness. IMF Working Papers
WP/11/278, pp. 4-8.
Jappelli, T. & Pagano, M. (1999). Information Sharing Lendig and Defaults. Journal of Finance, vol.
43, no. 5, pp. 1693-1718.
Jappelli, T. & Pagano, M. (2000). Information Sharing in Credit Markets: The European Experience.
University of Salerno: CSEF Working Paper No. 35.
Jensen, M. and Meckling, W. (1976). Theory of the Firm: Management Behaviour, Agency Cost and
Ownership Structure. Journal of Financial Economics, vol. 3, no. 4, pp. 305-360.
Jimenez, G. & Saurina, J. (2006). Credit Cycles, Credit Risk and Prudential Regulation. International
Journal of Central Banking, vol. 2, pp. 65-98.
Kithinji, A.M. (2010). Credit Risk Management and Profitability of Commercial Banks in Kenya.
Louzis, D.P., Vouldis, A.T. and Metaxas, V.L. (2010). Macroeconomic and bank-specific
determinants of non-performing loans in Greece: a comparative study of mortgage, business and
consumer loan portfolios. Bank of Greece.
Maudos, J. & de Guevara, J.F. (2004). Factors Explaining the Interest NMargin in Banking Sectors of
European Union. Journal of Banking and Finance, pp. 2259-2281.
Mendoza, E.G. & Terrones, M. (2008). An Anatomy of Credit Booms: Evidence from Macro
Appregates and Micro Data. IMF Working Paper No. 08/226.
Merrouche, O. & Nier, E. (2010). What Caused the Global Financial Crisis- Evidence on the drivers
of Financial Imbalance 1999-2000. IMF Working Paper.
Musyoki, D. (2011). The Imapct of Credit Risk Management on the Financial Performance of Banks
in Kenya. Journal of Business and Public Management, vol. 2, no. 2, pp. 72-80.
Mwaura, I.G. (2013). The Determinants of Credit Risk in Commercial Banks in Kenya. University of
Nairobi.
Ngugi, R.W. (2001). An Empirical Analyis of Interest Rate Spread in Kenya. African Economic
Consortium, Research Paper 106.
Petersen, M.A. and Raghuram, G.R. (1994). The Benefits of Lending Relationships: Evidence from
Small Business Data. Journal of Finance, vol. 49, p. 3.
Ramlall, I. (2009). Bank Specific, Industry Specific and Macroeconomic Determinants of Profitability
in Taiwanese Banking System: Under Panel Data Estimation. International Reserach Journal of
Finance and Economics.
Richard , E. (2011). Factors thatCause Non-Performing Loans in Commercial Banks in Tanzania and
Strategies to Resolve Them. Journal of Management Policy and Practise, vol. 12, no. 7.
Saunders, A. & Cornett, M.M. (2008). Financial Institutions Management. Financial Institutions
Management, 6th edition, McGraw-Hill.
Saunders, M., Lewis, P. & Thornhill, A. (2009). Reserach Methods for Business Students, 5th Edition.
Harlow: FT Prentice Hall.
Stern, G. and Feldman, R. (2004) 'Too Big to Fail: The Hazards of Banks Bailouts ', The Brookings
Institution, Washington DC.
Tamirisa, N.T. & Igan, D.O. (2007). Credit Growth and Bank Soundness in Emerging Europe. IMF
Working Paper 2007, pp. 2-7.
Tamirisa, N.T. & Igan, D.O. (2007). Credit Growth and Bank Soundness in Emerging Europe. IMF
Working Paper 2007, pp. 2-7.
Tennant, D. & Folawewo, A. (2009). Macroeconomic and Market Determinants of Banking Sector
Interest Rate Spreads. Empirical Evidence from Low and Middle Income Coutries. Applied Financial
Economics, vol. 19, no. 6, pp. 489-507.
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Published
2021-06-02
How to Cite
Collective Authors. (2021). Financial Institutions and Services: Array. Acta Universitatis Danubius. Œconomica, 12(1). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/1104
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