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Corporate Failure, Financial Performance, and Regulatory Oversight: Empirical Evidence from Financial Institutions Listed on the Lusaka Securities Exchange

Author

Listed:
  • Vincent Bwato

    (Institute of Distance Education, University of Zambia)

  • Dr. Norman Kamanga

    (University of Zambia)

  • Dr. Romeo Yohane

    (University of Zambia)

Abstract

This study investigates corporate failure among financial service institutions listed on the Lusaka Securities Exchange (LUSE), examining the role of financial performance and regulatory oversight. The study data were collected from six (6) LUSE-listed financial institutions, namely, Zambia National Commercial Bank (Zanaco Bank Plc), Absa Bank Plc, Standard Chartered Bank Plc, Investrust Bank Plc, Madison Financial Services Plc, and Zambia Reinsurance Plc. The study finds that weak financial performance, inadequate governance, and regulatory non-compliance are significant predictors of corporate failure, exemplified by the collapse of Investrust Bank. Conversely, strong financial indicators, effective risk management, and robust regulatory oversight correlate with sustainable operations and firm value, as observed in Zanaco Plc and Standard Chartered Plc. The findings highlight the importance of proactive monitoring, risk-based regulation, and governance interventions to prevent financial distress. The study proposes a diagnostics model that will prevent financial institutions from failure using traffic-light early warning signals (red, amber, green).

Suggested Citation

  • Vincent Bwato & Dr. Norman Kamanga & Dr. Romeo Yohane, 2026. "Corporate Failure, Financial Performance, and Regulatory Oversight: Empirical Evidence from Financial Institutions Listed on the Lusaka Securities Exchange," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 7(1).
    • Handle: RePEc:cwk:ajocsk:2026-10
    DOI: 10.59413/ajocs/v7.i1.10
    as

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    References listed on IDEAS

    as
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    4. Pathan, Shams & Faff, Robert, 2013. "Does board structure in banks really affect their performance?," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1573-1589.
    5. Beaver, Wh, 1966. "Financial Ratios As Predictors Of Failure - Reply," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 4, pages 123-127.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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