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Review of the Banking Sector Profit Persistence

Author

Listed:
  • Sanderson Abel

    (Department of Economist, Bankers Association of Zimbabwe, 14177 Gunhill Avenue, Gunhill, Harare, Zimbabwe,)

  • Khobai Hlalefang

    (Nelson Mandela Metropolitan University, Port Elizabeth South Africa,)

  • Pierre Le Roux

    (Department of Economics, Nelson Mandela Metropolitan University, Port Elizabeth, South Africa)

  • Learnmore Mutandwa

    (Midlands State University, Gweru, Zimbabwe.)

Abstract

The study aims to investigate the profit persistence and identify the determinants of profitability in the Zimbabwean banking sector during the period 2009-2014. The study established that banks were inefficient operating under monopolistic competition. The study revealed that profitability does not persist implying banks are enjoying abnormal profits over time. The results further reveals that market power, cost efficiency, credit risk, liquidity risk and the size of the bank are significant factors influencing bank profits. The results indicate that bank profits are determined mostly by strategies adopted by bank management.

Suggested Citation

  • Sanderson Abel & Khobai Hlalefang & Pierre Le Roux & Learnmore Mutandwa, 2018. "Review of the Banking Sector Profit Persistence," International Journal of Economics and Financial Issues, Econjournals, vol. 8(1), pages 54-63.
    • Handle: RePEc:eco:journ1:2018-01-7
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Competition; Generalised Methods of moment; Instrumental Variables; Persistence; Profitability.;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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