TITLE:
An Examination of the Extent to Which Systemic Risk Is Prevalent in the Zambian Banking Industry
AUTHORS:
Chresta C. Kaluba
KEYWORDS:
Systemic Risk, Banking Sector, Zambia, Prudential Data, Market Movements, Financial Stability, Economic Shocks, Political Events, COVID-19 Pandemic, Risk Management
JOURNAL NAME:
Journal of Financial Risk Management,
Vol.13 No.3,
August
28,
2024
ABSTRACT: This study examines the prevalence of systemic risk in the Zambian banking sector from 2010 to 2020 using prudential data obtained from the Bank of Zambia. Through a comprehensive analysis of monthly performance indicators for all banks, including total assets, loans and advances, deposits, equity, and profits, the study identifies periods of negative market movements indicative of systemic risk events. Findings reveal distinct periods of negative fluctuations, notably observed during 2011 Q3 to 2012 Q1, 2013 Q1 to 2013 Q2, 2015 Q4 to 2016 Q2, and 2020 Q1 to 2020 Q3. These periods coincide with significant economic and political events in Zambia, such as the election of President Michael Sata, fiscal challenges, a drop in copper prices, and the impact of the COVID-19 pandemic. The study underscores the vulnerability of the Zambian banking sector to external shocks and emphasizes the importance of robust risk management frameworks and policy responses to enhance sector resilience.