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Determinants of Banking Sector Profitability in Zimbabwe

Author

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  • Sanderson Abel

    (Nelson Mandela Metropolitan University, South Africa)

  • Pierre Le Roux

    (Nelson Mandela Metropolitan University, South Africa.)

Abstract

The study sought to establish the determinants of banking sector profitability in Zimbabwe during the period 2009-2014. The study specifically looked at the evolution and determinants of banking sector profitability after Zimbabwe adopted a multicurrency system. Employing the fixed effects panel regression models the study shows that banking sector profitability in Zimbabwe is driven by the quality of decisions made by bank management with regard to liquidity risk, credit risk, asset composition and management, expense management and capital size. The results implies that profitability of the Zimbabwean banking sector can be improved by increasing the quality of the assets, improving expense management, improving liquidity and capital levels. The study confirms that bank managers have a significant role in shaping the profitability of the sector.

Suggested Citation

  • Sanderson Abel & Pierre Le Roux, 2016. "Determinants of Banking Sector Profitability in Zimbabwe," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 845-854.
    • Handle: RePEc:eco:journ1:2016-03-4
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    2. Sreemanta Sarkar & Debdas Rakshit, 2023. "Factors Influencing the Performance of Commercial Banks: A Dynamic Panel Study on India," FIIB Business Review, , vol. 12(1), pages 85-99, March.
    3. Dedi Kusmayadi & Yusuf Abdullah & Irman Firmansyah, 2022. "Master of Management Program, Faculty of Postgraduate, Siliwangi University, Tasikmalaya, Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 12(1), pages 23-31.
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    6. Kanu Success Ikechi & Nwadiubu Anthony, 2021. "Commercial Bank Loans and the Performance of Small and Medium Scale Enterprises (SMEs) In Nigeria," International Journal of Innovation and Economic Development, Inovatus Services Ltd., vol. 6(6), pages 46-59, February.
    7. Kotey, Richard Angelous & Kusi, Baah & Akomatey, Richard, 2019. "Ownership structure and profitability of listed firms in an emerging market," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue Online Fi, pages 1-16.
    8. Shahbaz Bhatti & Naveed Tariq & Muhammad Rizwan & Muhammad Ajmal & Abdul Rehman Aslam & Kamran Javed, 2020. "Impact Of Risk Management On Profitability Of Banks," Malaysian E Commerce Journal (MECJ), Zibeline International Publishing, vol. 3(3), pages 22-26, March.
    9. Ozili, Peterson K, 2024. "Bank profitability determinants in Africa: A review of literature," MPRA Paper 120777, University Library of Munich, Germany.
    10. Davis, E Philip & Ali Abdilahi, Ridwa, 2022. "Econometric Analysis of the Determinants of Bank Profitability in Three Major African Counties: Kenya, Nigeria and South Africa," National Institute of Economic and Social Research (NIESR) Discussion Papers 536, National Institute of Economic and Social Research.
    11. Bester Chimbo, 2020. "Information and Communication Technology and Electricity Consumption in Transitional Economies," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 296-302.
    12. Eissa A. Al-Homaidi & Mosab I. Tabash & Najib H. S. Farhan & Faozi A. Almaqtari, 2018. "Bank-specific and macro-economic determinants of profitability of Indian commercial banks: A panel data approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1548072-154, January.

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    More about this item

    Keywords

    Banking Profitability; External Determinants; Internal Determinants; Fixed Effects; Generalized Methods of Moments;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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