Insights on non-performing loans: evidence from Zimbabwean commercial banks in a dollarised environment (2009-2012)
This study was prompted by the gradual deterioration in asset quality in most commercial banks in Zimbabwe after the adoption of the multiple currency exchange rate regime. The poor asset qualities were reflected by the non-performing loans trending towards the watch list category. In this regard we...
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Scholarlink Research Institute Journals
2016
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| Online Access: | http://hdl.handle.net/11408/1423 |
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| author | Chikoko, Laurine Mutambanadzo, Tendekayi Vhimisai, Takaiona |
| author_facet | Chikoko, Laurine Mutambanadzo, Tendekayi Vhimisai, Takaiona |
| author_sort | Chikoko, Laurine |
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| description | This study was prompted by the gradual deterioration in asset quality in most commercial banks in Zimbabwe after the adoption of the multiple currency exchange rate regime. The poor asset qualities were reflected by the non-performing loans trending towards the watch list category. In this regard we investigated the commercial bank credit process with the objective of understanding the fundamental causes of the impaired assets that are bedeviling the Zimbabwean banking sector so that some of the mistakes are not repeated and correctional measures are put in place. The methodology adopted a survey research design with use of questionnaires and interviews with commercial banks head credit risk, head retail and head corporate banking division from 15 registered commercial banks in Zimbabwe. Research findings show that some banks were sitting on nonperforming loans due to poor credit analysis processes; wrong products offered to the clients; lending based on balance sheet strength instead of cash flow based lending; banks taking too much comfort in security; information asymmetry leading to moral hazard; economic environment and political influence. Key recommendations include an urgent setting up of the Credit Bureau; banks should not adjust clients request and the need for banks to consider the economic environment and adjust their credit culture. The central bank needs to tighten its supervisory role and ensure prudential guidelines are not violated. |
| format | Article |
| id | ir-11408-1423 |
| institution | My University |
| language | English |
| publishDate | 2016 |
| publisher | Scholarlink Research Institute Journals |
| record_format | dspace |
| spelling | ir-11408-14232022-06-27T13:49:06Z Insights on non-performing loans: evidence from Zimbabwean commercial banks in a dollarised environment (2009-2012) Chikoko, Laurine Mutambanadzo, Tendekayi Vhimisai, Takaiona Credit analysis, loan products, non-performing loans, Zimbabwean commercial banks, dollarised environment. This study was prompted by the gradual deterioration in asset quality in most commercial banks in Zimbabwe after the adoption of the multiple currency exchange rate regime. The poor asset qualities were reflected by the non-performing loans trending towards the watch list category. In this regard we investigated the commercial bank credit process with the objective of understanding the fundamental causes of the impaired assets that are bedeviling the Zimbabwean banking sector so that some of the mistakes are not repeated and correctional measures are put in place. The methodology adopted a survey research design with use of questionnaires and interviews with commercial banks head credit risk, head retail and head corporate banking division from 15 registered commercial banks in Zimbabwe. Research findings show that some banks were sitting on nonperforming loans due to poor credit analysis processes; wrong products offered to the clients; lending based on balance sheet strength instead of cash flow based lending; banks taking too much comfort in security; information asymmetry leading to moral hazard; economic environment and political influence. Key recommendations include an urgent setting up of the Credit Bureau; banks should not adjust clients request and the need for banks to consider the economic environment and adjust their credit culture. The central bank needs to tighten its supervisory role and ensure prudential guidelines are not violated. 2016-05-19T14:56:04Z 2016-05-19T14:56:04Z 2012 Article 2141-7024 http://hdl.handle.net/11408/1423 en Journal of Emerging Trends in Economics and Management Sciences;Vol.3, No. 6:p. 882-886 open Scholarlink Research Institute Journals |
| spellingShingle | Credit analysis, loan products, non-performing loans, Zimbabwean commercial banks, dollarised environment. Chikoko, Laurine Mutambanadzo, Tendekayi Vhimisai, Takaiona Insights on non-performing loans: evidence from Zimbabwean commercial banks in a dollarised environment (2009-2012) |
| title | Insights on non-performing loans: evidence from Zimbabwean commercial banks in a dollarised environment (2009-2012) |
| title_full | Insights on non-performing loans: evidence from Zimbabwean commercial banks in a dollarised environment (2009-2012) |
| title_fullStr | Insights on non-performing loans: evidence from Zimbabwean commercial banks in a dollarised environment (2009-2012) |
| title_full_unstemmed | Insights on non-performing loans: evidence from Zimbabwean commercial banks in a dollarised environment (2009-2012) |
| title_short | Insights on non-performing loans: evidence from Zimbabwean commercial banks in a dollarised environment (2009-2012) |
| title_sort | insights on non-performing loans: evidence from zimbabwean commercial banks in a dollarised environment (2009-2012) |
| topic | Credit analysis, loan products, non-performing loans, Zimbabwean commercial banks, dollarised environment. |
| url | http://hdl.handle.net/11408/1423 |
| work_keys_str_mv | AT chikokolaurine insightsonnonperformingloansevidencefromzimbabweancommercialbanksinadollarisedenvironment20092012 AT mutambanadzotendekayi insightsonnonperformingloansevidencefromzimbabweancommercialbanksinadollarisedenvironment20092012 AT vhimisaitakaiona insightsonnonperformingloansevidencefromzimbabweancommercialbanksinadollarisedenvironment20092012 |