Review of the Banking Sector Profit Persistence

Sanderson Abel, Hlalefang Khobai, Pierre Le Roux and Learnmore Mutandwa
Additional contact information
Sanderson Abel: Department of Economist, Bankers Association of Zimbabwe, 14177 Gunhill Avenue, Gunhill, Harare, Zimbabwe,
Pierre Le Roux: Department of Economics, Nelson Mandela Metropolitan University, Port Elizabeth, South Africa
Learnmore Mutandwa: Midlands State University, Gweru, Zimbabwe.

International Journal of Economics and Financial Issues, 2018, vol. 8, issue 1, 54-63

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.

Keywords: Competition; Generalised Methods of moment; Instrumental Variables; Persistence; Profitability. (search for similar items in EconPapers)
JEL-codes: C33 G21 L25 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2018-01-7

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