An evaluation of the efficiency of the banking sector in Zimbabwe

The study evaluates the cost and revenue efficiency of the Zimbabwean banking sector using the data envelopment analysis and Tobit regression model. Revenue and cost efficiency increased between 2009 and 2012 as a result of economic stability and growth registered in the economy. The trend in efficiency was negatively affected during 2013-2014 as a result of declining economic growth and price controls, which were imposed on the banking sector. The study established that private banks were more revenue and cost efficient compared to public banks. Domestic banks were relatively cost and revenue efficient compared to foreign banks supporting the home field advantage hypothesis. Commercial banks were cost and revenue efficient compared to building societies. The main drivers of both cost and revenue efficiency are cost income ratio, capital adequacy, macroeconomic growth and inflation. The results mean that banking sector efficiency is dependent on the decisions of the bank regulators and bank management. It is recommended that the government should improve the operating environment for banks and desist from interfering with operation of market forces. Competition among banks should be encouraged to improve the efficiency of the banking sector.Keywords: Cost and revenue efficiency, Data envelopment analysis, Tobit regression, Zimbabw

Simulation analysis of alternative strategies for public debt issuance in Zimbabwe: Is there a trade-off?

This paper presents a simulation of alternative strategies for public debt issuance in Zimbabwe. The analysis is undertaken with a view to find a strategy that minimises the cost and risk of public debt under different scenarios of interest and exchange rate developments. The premise is that increases in debt service charges due to risky allocation of public debt can substantially change public debt dynamics. The risky allocation can derive from an excessive exposure of the government to exchange rate, interest rate and commodity price shocks. The results show a trade-off between a debt strategy that largely depends on more external concessional borrowing and a debt strategy aimed at increasing the share of domestic debt in the public debt portfolio for market development purposes. While the strategy that maximises recourse to external concessional borrowing was found to be desirable from a cost perspective, it proved to be less desirable from a risk perspective after taking into consideration the exchange rate effect. Moreover the conditions attached by international financial institutions and other official creditors to accessing concessional loans makes the strategy less desirable. The results, therefore, underscore the need for authorities to ensure a neat balance between external and domestic debt borrowing to ensure long-term public debt sustainability.Keywords: Public debt management; Debt cost; Ris

The role of monetary policy in Zimbabwe's hyperinflation episode

This paper explores the role of monetary policy in Zimbabwe’s hyperinflation episode, using the Autoregressive Distributed Lag (ARDL) and Error Correction Model (ECM) approaches with monthly data from 2006:01 to 2008:07. Results from both the ECM and ARDL approaches show that during the study period, hyperinflation was caused by expansionary monetary policy, the exchange rate premium and inflation expectations for both the short and long-term. Zimbabwe’s hyperinflation episode brings to the fore the importance of ensuring that the Central Bank is independent in executing its mandate of influencing the monetary policy process in a manner that ensures price stability.Keywords: Monetary Policy; Hyperinflation; Autoregressive Distributed Lag; Error Correction Mode

Interest Rate Reforms and Economic Growth in SADC Countries: The Savings and Investment Channel

The 2008/2009 global financial crisis has re-ignited the debate around financial reforms with contrasting views with regards to the impact of financial reforms on economic growth. This study examines the impact of interest rate reforms on economic growth through savings and investments in SADC countries for the period 1990-2015. Three specifications are used for the analysis; the first one determines the influence of interest rate reforms on savings, the second one analyses the effect of savings on investments while the third one examines whether investments have a positive impact on economic growth. The Pooled Mean Group (PMG) estimation technique is employed for analysis. The results show that interest rate reforms have a positive impact on economic growth through savings and investments. The study therefore recommends that market forces should be allowed to determine real interest rates and furthermore, real interest rates maintained at artificially low levels may harm economic growth.JEL Codes - C50; E20; E6

Water clustering in polychloroprene

Water sorption has been studied gravimetrically for polychloroprene rubber samples, first at a fixed hygrometric ratio (98% HR) and several temperatures (25, 40, 60 and 80 °C) for samples of 1.8 and 3.8 mm thickness (Constant Temperature and Hygrometry, CTH experiments), then at fixed temperature (40 °C) and several hygrometric ratios ranging from 0 to 95% HR on samples of 0.1 mm thickness (DVS experiments). CTH experiments reveal an abnormal sorption behavior: after an apparently fickian transient period, the water absorption continues at almost constant rate, no equilibrium is observed after more than 2500 h, whatever the temperature. DVS experiments reveal a very low Henry's solubility but the formation of clusters at water activities higher than 40%. The water diffusivity is almost independent of activity below 50% HR and decreases rapidly when activity increases above 50%. Contrary to CTH experiments, equilibrium is reached in DVS and the difference is not simply linked to the well-known effect of sample thickness on diffusion rate. The results allow hypotheses such as hydrolysis or osmotic cracking to explain the abnormal sorption phenomenon to be rejected. It is suggested that clusters could be polymer-water complexes having a linear/branched structure able to grow without phase separation that could explain the reversibility of sorption-desorption cycles. The difference of behavior between thin 0.1 mm and thicker 1.8 or 3.8 mm samples could be due to an effect of swelling stresses

Oxidation of unvulcanized, unstabilized polychloroprene: A kinetic study

Thermal oxidation in air at atmospheric pressure, in the 80-140 °C temperature range and in oxygen at 100 °C in the 0.02-3 MPa pressure range, of unvulcanized, unstabilized, unfilled polychloroprene (CR) has been characterized using FTIR and chlorine concentration measurement. The kinetic analysis was focused on double bond consumption. A mechanistic scheme involving unimolecular and bimolecular hydroperoxide decomposition, oxygen addition to alkyl radicals, hydrogen abstraction on allylic methylenes, alkyl and peroxyl additions to double bonds and terminations involving alkyl and peroxy radicals was elaborated. The corresponding rate constants were partly extracted from the literature and partly determined from experimental data using the kinetic model derived from the mechanistic scheme in an inverse approach. Among the specificities of polychloroprene, the following were revealed: The rate of double bond consumption is a hyperbolic function of oxygen pressure that allows a law previously established for the oxidation of saturated substrates to be generalized. CR oxidation is characterized by the absence of an induction period that reveals the instability of hydroperoxides. The kinetic analysis also reveals that peroxyl addition is faster than hydrogen abstraction but slower in CR than in common hydrocarbon polydienes