Determinants of non-performing loans in microfinance sector of Zimbabwe (2018 - 2022)

Author

Musara, Tinotenda

Title

Determinants of non-performing loans in microfinance sector of Zimbabwe (2018 - 2022)

Abstract

This researchl explores the factors influencing non-performing loans (NPLs) in the microfinance industry of Zimbabwe from 2018 to 2022. The aim of the study is to analyze the different macroeconomic, institutional, and borrower-related elements that affect NPLs in microfinance institutions (MFIs) in Zimbabwe. The study is based on credit rationing theory, loanable funds theory, the Monti-Klein model, and the delegated monitoring of borrowers theory. A combination of methods, including surveys, interviews, and observations, was used to collect primary and secondary data from MFI executives and other stakeholders. The results identify various factors contributing to NPLs, such as economic conditions, lending policies, customer profiles, and credit risk management practices of MFIs. The study emphasizes the importance of a comprehensive and collaborative approach involving MFI management, policymakers, and customers to address the NPL issue. The research offers valuable insights to assist MFIs in developing effective credit risk mitigation strategies, creating innovative financial products, and improving customer targeting methods. The conclusions stress the significance of ongoing monitoring, capacity building, and regulatory oversight to ensure the stability and growth of the microfinance sector in Zimbabwe.

Date

September 2024

Publisher

BUSE

Keywords

Loans

Microfinance sector

Determinants

Supervisor

Non-performing loans