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Assessing The Effectiveness of Portfolio Management on the Performance of Commercial Banks in Zambia: Evidence from Absa Bank in Lusaka

Author

Listed:
  • Mwansa, Precious L.

    (Graduate School of Business, University of Zambia)

  • Kapotwe, Euston

    (Graduate School of Business, University of Zambia)

Abstract

This study examines the effectiveness of portfolio management practices on the financial performance of commercial banks in Zambia, with specific reference to Absa Bank in Lusaka. Despite the adoption of risk-based frameworks and diversified asset strategies, banks continue to face challenges arising from market volatility, regulatory requirements, and changing consumer borrowing patterns. The study seeks to assess the impact of asset allocation practices, credit portfolio quality, and investment portfolio decisions on financial performance. A convergent parallel mixed-methods design was adopted, integrating quantitative and qualitative data. Quantitative data were collected through structured questionnaires using random sampling techniques, while qualitative insights were obtained from portfolio management staff. Regression analysis results indicate that asset allocation practices have a strong and statistically significant effect on financial performance, explaining a substantial proportion of variance. Similarly, credit portfolio quality demonstrates a significant positive relationship with financial performance, while investment portfolio decisions also show a positive and statistically significant effect, though to a lesser extent. The study concludes that effective portfolio management is a critical determinant of bank performance and recommends strengthening asset allocation strategies, enhancing credit portfolio monitoring, and improving investment decision frameworks to optimize financial outcomes in commercial banks.

Suggested Citation

  • Mwansa, Precious L. & Kapotwe, Euston, 2026. "Assessing The Effectiveness of Portfolio Management on the Performance of Commercial Banks in Zambia: Evidence from Absa Bank in Lusaka," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 7(2).
    • Handle: RePEc:cwk:ajocsk:2026-42
    DOI: 10.59413/ajocs/v7.i2.24
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    References listed on IDEAS

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    1. Imran Hussain & Sudipa Majumdar, 2025. "Extending Fama-French factors with interest rate changes: an empirical study of USA versus emerging markets," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 21(3), pages 301-315.
    2. Lamine Chibawe & Dr. Lubinda Haabazoka, 2025. "A Study of the Factors Influencing Bank Loan Performance in Zambian Commercial Banks," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 6(2).
    3. Taiwo Aderogba & Ibrahim Ayoade Adekunle & Olayinka Esther Atoyebi, 2025. "Post-Crisis Bank Profitability in BRICS: A CAMEL Approach," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 24(3), pages 360-384, September.
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      JEL classification:

      • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
      • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
      • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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