An Assessment of the relationship between non-performing loans and the level of bank performance. A case of Zimbabwean banks
- Author
- Tarugarira, Linnety A.
- Title
- An Assessment of the relationship between non-performing loans and the level of bank performance. A case of Zimbabwean banks
- Abstract
- The purpose of this study was to assess the relationship that exists between nonperforming loans and a bank’s performance level. Banks are an important component of any economy for they mobilise savings for productive investments and facilitate capital flows to various economic sectors. Banks are the principal source of credit for households and business firms. In emerging economies like Zimbabwe, banks play an even more critical role for most borrowers have no access to capital markets thus making the health of the financial sector very important for these economies. During the past few years, there has been an increased number of bank problems which have greatly affected economic growth. Banking crises have historically been associated with the considerable accretion of non-performing loans which can account for a substantial share of total assets of insolvent banks and financial institutions especially in periods of systemic banking crises. Since the onset of the dollarization period in 2009, NPLs have increased from an average of 1.62% in 2009 to 18.49% by June 2014 and from the trend it can be seen that NPLs have yet to reach their peak. While NPLs are high in Zimbabwe, global statistics also show that they have been prevalent in other countries with Global Financial Stability Reports showing that in the European region, they increased from an average of 3% in 2007 to 11% by end of 2011.
- Date
- June 2024
- Publisher
- BUSE
- Keywords
- Bank performance
- Non-performing loans
- Zimbabwean banks
- Supervisor
- N/A
- Item sets
- Department of Banking and Finance
- Media
-
Linnety Tarugarira.pdf