Asset Quality and Ownership Structure: Case of Zimbabwean Banking Industry
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Abstract
the objective of this paper is to investigate the influence on various ownership structures on the asset quality of Zimbabwean banks. The proxy for asset quality used in this paper is the ratio of non-performing loans to loans ratio. The Zimbabwean banking industry is composed of foreign banks, indigenous banks and state banks. Evidence from both developing and developed economies on the subject matter is still inconclusive reveal previous studies indicate conflicting results. The paper employed an Analysis of Variance (ANOVA) at 5% level of significance and it was realized that ownership structure has a significant effect on the quality of assets for Zimbabwean banks with foreign banks taking the lead followed by indigenous and state banks thus suggesting that state banks needs to improve their policy framework so that the loan clients meet their obligations. Moreover, Banks should evaluate loan clients so that the value of nonperforming loans will be reduced and this improves the asset quality of banks.
Keywords
Asset Quality, Banking Industry
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