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Zimbabwean Commercial Banks Performance under Multiple-Currency System: A Dynamic Panel Data Analysis

Author

Listed:
  • Caroline Makumbe
  • Regret Sunge
  • James Zivanomoyo

    (Great Zimbabwe University)

Abstract

This paper econometrically examines commercial bank performance during the multiple currency period from 2009-2018. A dynamic panel-data model theorized on the Structure-Conduct-Performance paradigm was estimated using the differencegeneralized method-of-moments (GMM) approach. The key finding is that the multiple currency system, through growth in deposits and money supply, delivered a statistically significant but weak improvement in bank performance. Accordingly, we welcome the recent scrapping of the multiple currency system. Nonetheless, monetary authorities should focus on money supply targeting to contain inflation and preserve the value of the local currency. Furthermore, banks should employ competitive strategies and be resilient to systematic risk to enhance performance.

Suggested Citation

  • Caroline Makumbe & Regret Sunge & James Zivanomoyo, 2020. "Zimbabwean Commercial Banks Performance under Multiple-Currency System: A Dynamic Panel Data Analysis," The African Finance Journal, Africagrowth Institute, vol. 22(2), pages 40-51.
    • Handle: RePEc:afj:journl:v:22:y:2020:i:2:p:40-51
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-finj-v22-n2-a3
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    More about this item

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G2 - Financial Economics - - Financial Institutions and Services

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