The Effect of Bank-Specific Factors on Banking Sector Development in Zimbabwe

Abstract

The study sought to ascertain the effect of bank-specific factors on banking sector development in Zimbabwe since the introduction of the multi-currency system. This was prompted by an inability of Zimbabwe’s banking system to efficiently and effectively execute its financial intermediary role of supplying affordable long-term loans to productive sectors of the economy as a catalyst for economic growth. The study made use of a post-positivist research philosophy and utilised 218 structured questionnaires to gather quantitative data on study constructs. Data was analysed using Partial Least Square Structural Equation Modelling (PLS-SEM) in SmartPLS 4.0 software model and SPSS software package version 25. Study findings revealed that liquidity, business intelligence and analytics, board structure, asset quality, digitalisation and bank size have a statistically positive effect on banking sector development. The study, therefore, recommends authorities to invest in digital banking, enhance cybersecurity, augment bank liquidity, refine asset quality and boost banks’ capitalisation in order to enhance banking sector development.