Analysis of Credit Culture in the Zimbabwean Banking Sector

DRJ - Journal of Economics & Finance (2019), 4 (2), pp. 45 - 55.

11 Pages Posted: 16 May 2019

See all articles by Wellington Garikai Bonga

Wellington Garikai Bonga

Great Zimbabwe University

Givemore Chirenje

National University of Sciences and Technology (NUST)

Providence Mugayi


Date Written: April 1, 2019


This paper is motivated by high levels of non-performing loans in the Zimbabwean banking sector since dollarization in 2009. Banks are well known for their function of providing liquidity in the economy. Normal loan awarding require credit analysis. Credit analysis is undertaken to assess the possibility of the paying back of borrowed funds by the borrowers. Despite, the condition of credit analysis in place in banks, there is continued increase in levels of non-performing loans. The study seeks to analyse the credit culture of banks in Zimbabwe. The study employs a questionnaire approach to determine the level of credit culture employed in the banking sector. Using 188 responses from an electronic survey comprising of 17 questions including demographics, the study managed to explore various issues linked to credit culture of the Zimbabwean banking sector. Credit culture has been found to be below optimal level despite the fact that many respondents indicated that credit risk management is critical. Corporate governance issues have been identified as lacking in the sector, hence aiding to poor credit culture. Internal and external factors have been identified as defining poor credit culture in the sector. Poor credit framework in banks, nepotism and insider loans, political influence are some factors leading to poor credit culture. The study concludes by suggesting proper reforms in the banking sector to grant them autonomy from politics, development of proper credit framework to be followed, effective credit analysis, ongoing lender training among other measures. Good credit culture should be promoted to ensure a viable banking sector and hence promoting economic growth. Loan default is strongly linked to poor credit analysis and improper loan allocation, and this should be dealt with by encouraging good corporate governance and maintaining a good credit culture, hence avoiding NPLs.

Keywords: Banking Sector, Corporate Governance, Credit Culture, Loan Default, Non-performing Loans, Zimbabwe

JEL Classification: B26, C83, F34, G14, G21, G28, G32, G33, H81, L52, O16

Suggested Citation

Bonga, Wellington Garikai and Chirenje, Givemore and Mugayi, Providence, Analysis of Credit Culture in the Zimbabwean Banking Sector (April 1, 2019). DRJ - Journal of Economics & Finance (2019), 4 (2), pp. 45 - 55., Available at SSRN:

Wellington Garikai Bonga (Contact Author)

Great Zimbabwe University ( email )

P. O. Box 1235
Masvingo, Masvingo 00263

Givemore Chirenje

National University of Sciences and Technology (NUST) ( email )


Providence Mugayi

Independent ( email )

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