Laurine Chikoko

Financial inclusion by Zimbabwean commercial banks in a liquidity constrained environment

The study investigates the trends and challenges of financial inclusion by commercial banks in Zimbabwe after the adoption of the multiple currency regime. Results showed that some commercial banks made efforts to ensure financial inclusion. New innovations like cell phone banking and internet banking were positive steps towards ensuring financial inclusion by Zimbabwean commercial banks. The foreign owned commercial banks in Zimbabwe however were not doing much as compared to the locally owned commercial banks. A number of challenges to financial inclusion were identified, chiefly being the liquidity challenges and high bank charges. Based on the research findings, we recommend the structuring of sustainable financial products and establishment of supportive infrastructure to enable Zimbabwean commercial banks to mitigate the challenges of financial inclusion in a liquidity constrained environment.

An evaluation of banking sector regulatory capital in a multicurrency economy: a case for Zimbabwe

Abstract This paper seeks to evaluate Zimbabwe’s banking sector capital requirements based on existing theory and evidence. Literature surveyed is used to critically evaluate the existing design of bank capital requirements. The study shows that all banks in Zimbabwe had fallen short of minimum capital requirements in 2012, prompting aggressive capital raising strategies in the banking sector. In this study, various implications of the new capital requirements for the banking industry and the economy in general are discussed. The discussion supports the increase in capital requirements in that bank stability and lending would be enhanced as a result of such increase in capital. This however comes at a cost as the weighted average cost of funds increases due to the use of additional equity in capital structure of banks which further adversely impacts on borrowers. Overall, the study shows that benefits of increasing capital requirements outweigh the costs. Further, a set of recommendations for three economic sectors, namely, the banking institutions, the central bank and the government, on ways to respond to the regulatory changes and standard regulatory capital requirements are outlined.

Zimbabwe commercial banks liquidity management in the hyperinflation environment

The paper investigated liquidity management by commercial banks when there was hyperinflation. The main enquiry of this study v/as to understand how Zimbabwe commercial banks managed liquidity risk In a hyperintlatlonary environment. To achieve this, information was obtained from primary sources with data collected from decision makers ot fifteen commercial banks which met the criteria of full scale operation from 2000 -2009. To compliment this, secondary data sources were used. Focal areas ot the study wore to analyse years of bank business; ownership; liquidity risk management responsibility; products ottered by commercial banks: major sources of funds and applications; Internal and external liquid Instruments to manage liquidity risk, impact of inflation on liquidity risk management; and the effect the Reserve Bank of Zimbabwe instruments introduced to fight inflation. The findings show that liquidity risk management during tho hyperinflation was a challenge. The Instruments used by the Reserve Bank of Zimbabwe to fight Inflation had negative effect on commercial banks asset and liability management. In line with this, the monetary authorities were recommended to put In place measures which took into consideration the impact of their policies on bank liquidity risk management when there are problems of high inflation. Tho study also rocommends commeicial banks to take proactive management measures and long term views to operations, in other words beyond the current challenges posed by inflation. In the process banks would create new demand for the products.