An Investigation on the causes of bank failure in Zimbabwe (2009-2015)

Author

Chabvuta, Ashley

Title

An Investigation on the causes of bank failure in Zimbabwe (2009-2015)

Abstract

The research was aimed at determining the major causes of bank failure in Zimbabwe for the period (2009-2015). The leading objective of this research was to determine whether supervisory authorities were a factor to the failure of bank or causes banks to fail. The study also discusses the problems which were faced by the banking sector due to the advent of covid-19 pandemic.This research is driven by a lot of contrasting information and conclusions about the causes of bank failure all over the world including Zimbabwe. This was coupled by lack of sufficient knowledge and literature in Zimbabwe where a number of banking institutions have failed. This prompted the researcher to want to establish the main causes of bank failure in Zimbabwe. This was achieved through determining the key factors that caused banks to fail inherently and strategies that can be used to avert the possible bank failure using the banking sector institutions. The target population comprised only employees under the selected banks. The researcher used purely quantitative research strategies to achieve the objectives of the study. Stratified random sampling was used to obtain quantitative data using a questionnaire and interviews. A total of 45 employees comprising of senior bank managers, supervisors and bank tellers participated in this study. Descriptive statistics such as mean, standard deviations and cross-tabulations were utilised to analyse quantitative data. Journals, RBZ reports and Deposit Protection Corporation were sources of secondary data The results show that factors such as lack of supervision, poor liquidity, poor corporate governance, non-performing loans, political interference, bank size and low GDP have a negative influence on bank failure were the mean statistics were roughly equal to 4. To overcome the problems caused by these determinants the researcher point out some of the measures which were implemented by the Reserve Bank of Zimbabwe. The study also put some recommendations to the Central bank, banks and the government, also banks to make decisions that can mitigate bank failure as well as suggestions for future research concerning the research issues. Suggestion was made to dig deeply on the causes of bank failure taking into account the issue of technology.

Date

June 2022

Publisher

BUSE

Keywords

Banking sector,

Commercial banks,

Bank failure,

Supervisor

Mr. Njanike,