Effect of inflation on the performance: case study of Zimbabwean commercial banks · Electronic Theses and Dissertations

Author

Wison, Tatenda

Title

Effect of inflation on the performance: case study of Zimbabwean commercial banks

Abstract

Inflation is not only an economic evil; its effects are far reaching and disastrous as it robs society the very fiber of decent living. Zimbabwe is in inflationary environment and as it seems the number one enemy is here to stay. As political heavyweights and economic echelons scuff their heads for a solution, commercial banks have not been spared in the mêlée against inflation neither has the enemy itself spared the banking system as highlighted by the results of this study under the following topic; banking sector performance in a inflation environment in Zimbabwe for the period 2018 to 2021. The research established that inflation is harmful to banks as highlighted by the trends in profits which are declining against the galloping inflation. The relationship between bank profits and inflation determined using correlation coefficient; a quantitative technique is positive when inflation is within low levels like below 100% but this relationship becomes inverse as inflation continues to rise. Profits have risen in numeral terms but in real terms the banks are reeling and showing extreme signs of stress as the future gets gloom with dawn every day. If all else were equal maybe these banks could breathe some fresh air beyond Zimbabwean boarders but given the overvalued local currency against a background of acute foreign currency shortages, corruption and expropriation of private properties who else is willing to deal with Zimbabwean banks except a few. Any future research that looks at this dynamic and complex relationship should encompass other important variables that reflect the performance and survival prospects of any financial institutions. The recommendations for the next researcher should be that they should develop data driven strategies whereby policy makers should utilize data driven approaches to develop strategies for managing inflation effectively. Another recommendation is that financial institutions should closely monitor economic conditions and adapt their strategies accordingly.

Date

2024

Publisher

BUSE

Keywords

Inflation

Commercial banks

Supervisor

N/A