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

Precious L. Mwansa and Euston Kapotwe
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Precious L. Mwansa: Graduate School of Business, University of Zambia
Euston Kapotwe: Graduate School of Business, University of Zambia

African Journal of Commercial Studies, 2026, vol. 7, issue 2

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.

Keywords: Portfolio Management; Financial Performance; Consumer Borrowing; Investment (search for similar items in EconPapers)
JEL-codes: G11 G21 G32 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:cwk:ajocsk:2026-42

DOI: 10.59413/ajocs/v7.i2.24

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