Ownership Structure and Risk Taking Behaviour - Evidence from the Zimbabwean Banking Sector

Author(s)

Lucky Tuzuka Musikavanhu , Mufaro Andrew Matandare , Noel Zhou ,

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Volume 8 - July 2019 (07)

Abstract

The purpose of this paper was to investigate the impact of ownership structure on the risk-taking behavior of banks in Zimbabwe from 2009 to 2011. The banking sector in Zimbabwe is divided into three sectors which are foreign-owned, state owned and locally owned. Banks in each segment were selected using a multistage sampling technique where banks were stratified and followed by convenient sampling technique. The risk taking behavior was measured as a ratio of Non-Performing Loans (NPL) to equity and the data was from financial statements of the sampled banks. An Analysis of Variance (ANOVA) was adopted as an analysis technique and the results indicated that ownership structure strongly influences risk taking behavior with foreign banks taking greater exposure. The paper suggests that policies should be structured in a way that prevents unnecessary risk taking behavior bank managers as this may lead to instability and the collapse of the banking sector

Keywords

Ownership structure, Risk taking behaviour, Banking sector, ANOVA, Zimbabwe

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