An An empirical study on the factors influencing the performance of financial institutions in Zimbabwe

  • Isabel Linda Moyo National University of Science and Technology
  • Victor Gumbo University of Botswana
  • Eriyoti Chikodza Great Zimbabwe University
  • Brian Jones National University of Science and Technology
Keywords: ROA, ROE, NIM, Panel Data, Arellano-Bond Estimation, Microeconomic Factors.

Abstract

The main aim of this study was to empirically assess the main microeconomic factors that affect a bank's performance. The objectives were to ascertain if there is a relationship between the performance variables with the microeconomic variables, determine those that are significant and their impact on the performance of banks in Zimbabwe. An econometric model was built from balanced panel data and the Arellano-Bond estimation procedure was employed. The empirical analysis was carried out on a sample of 17 banks that were operational in the years 2010 to 2017 in Zimbabwe. Return on Assets (ROA), Return on Equity (ROE) and Net Interest Margin (NIM) were used as the performance indicators in the analysis. The results indicate the main microeconomic factors to be those attributed to growth, credit risk, capitalisation, managerial efficiency, liquidity and diversification in the Zimbabwean financial institutions. Performance in these institutions is generally good as measured by positive persistent profits, that is, ROA, ROE and NIM. These returns reflect the extent to which these institutions are resilient to the economic crisis.

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Published
2019-09-22
How to Cite
Moyo, I., Gumbo, V., Chikodza, E., & Jones, B. (2019). An An empirical study on the factors influencing the performance of financial institutions in Zimbabwe. International Journal of Finance & Banking Studies (2147-4486), 8(4), 01-20. https://doi.org/10.20525/ijfbs.v8i4.514
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Articles