ABSTRACT

The research sought to establish the determinants of non-performing loans in the banking sector of Zimbabwe. The study covered the period from 2009 to 2013 using quarterly time-series data employing the ordinary list squares method to ascertain the factors that contribute to NPLs. Over the period, the non-performing loans have been on an upward trend despite the use of the multi-currency. The major research findings and conclusions is that inflation, unemployment and interest rates are positively related to the level of nonperforming loans. However, the variable Real Gross Domestic Product was found to be inversely related to the level of NPLs. The research concluded by urging the government and the banks to jointly determine the level of interest rates in the economy and the continued use of the multiple currency so as to keep inflation low so as to avert excessive loan defaults.