Influence of credit risk management on the financial performance of commercial banks in Harare, Zimbabwe
- Author
- Gezana, Ngaatendwe
- Title
- Influence of credit risk management on the financial performance of commercial banks in Harare, Zimbabwe
- Abstract
-
Up before ZAMCO's involvement in purchasing non-performing loans from commercial banks, Zimbabwean commercial banks continuously reported volatility in profit level margins. losses supposedly caused by commercial banks' poor credit management strategies. The goal of the study was to determine the credit management approaches employed by commercial towards the financial performance of commercial banks. Additionally, it looked for any connections between credit management and financial performance and the difficulties commercial banks face in properly managing credit. The researcher used both a descriptive research design and a correlation study design. A sample of 124 respondents was used, rather than the 162 respondents that made up the targeted demographic. Questionnaires and interview guides were utilized to gather data for this investigation. To evaluate the theory, a single regression analysis model was employed. According to the findings, all commercial banks employ credit management strategies before making loans to potential borrowers, and the strategies used were deemed sufficient in terms of loan payback and borrower evaluation. Commercial banks have acknowledged that they confront some difficulties in effectively managing credit despite having efficient credit appraisal methods. Additionally, research results indicated a favorable association between financial performance and credit management. Conclusions were drawn based on the findings, which showed that among the many credit management techniques, the 5Cs of credit management appear to be the methodology employed by Zimbabwean commercial banks to evaluate their borrowers and CAMPARI was the least used strategy. SWOT analysis, stress testing, and artificial neural networks were among the other credit appraisal methods utilized by Zimbabwean commercial banks. As a result, the study suggested that Zimbabwean commercial banks abandon traditional expert systems in favor of more adaptable ones, such credit information exchange systems. The report also suggested that serious efforts be made to improve credit risk management tools and that commercial banks be somewhat encouraged to embrace international credit standards in order to lessen some of the issues that face commercial banks.
- Date
- 2022
- Publisher
- BUSE
- Keywords
- Credit risk management
-
Financial performance
- Supervisor
- Mrs. Mutero
- Item sets
- Department of Accountancy