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An Evaluation of the Relationship Between Capitalisation and Bank Profitability

In: Business and Management

Submitted By sindiso
Words 14030
Pages 57
An evaluation of the relationship between capitalisation and bank profitability



This project is a special dedication to my wife Esinathi Sibanda; daughters Faith and Cindy Sibanda my brother Leonard, my sister Nyembezi and my parents for their unwavering support in my studies.


First and foremost, I desire to convey my sincere gratitude to Mr. T Chigamba, my research project supervisor for his consistent guidance and uncountable patience throughout the project. I also want to express my gratitude to my brother Leonard for his unwavering support and encouragement during the research project. Special mention also goes to Michael my fellow student for his support.


The issue of bank capitalisation as it relates to profitability and the overall soundness of the financial services sector has generated a lot of debate in industry and commerce, academics and scholars propounding several pieces of literature to put to the fore their heads of arguments and possible influence the thinking of policy makers, monetary authorities in particular. The pronouncements by RBZ that banks have to have threshold of one hundred million dollars ($100,000,000) as capitalisation did not help the situation either, instead it created anxiety in the banking fraternity with other banks falling by the way side (Time bank, Royal bank and recently Metbank.) and others desperately looking for new credit lines and avenues for mergers in order to comply with the RBZ capitalisation requirements.
It is upon this background that the research seeks to establish whether there exist a relationship between bank capitalisation and profitability. However, in an endeavor to provide answers to the research question,…...

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