Evaluating Bank Asset Liability Management Under Uncertainty

Executive summary

The research effort seeks to examine and evaluate asset liability management practices in Banks given a changing and uncertain operating environment. The concern is to assess the impact of unstable regulatory and market developments on individual bank asset liability policies and evaluate traditional approaches to Treasury exposure management against a volatile market. The main goal is to identify current and past asset liability management policies, pick out possible shortcomings and strengths in light of an unstable market and then recommend possible shifts in line with environmental dictates. It seeks to delve into how financial institutions have been able to adjust treasury exposure management (asset-liability mix) given adverse developments in the Zimbabwean financial system. The methodology to be used is based on a qualitative approach where primary and secondary data are collected by way of structured questionnaires. Analytical tools such as graphs and charts shall be used to present findings and make conclusions. This approach has been chosen due to the nature of expected results which are in the form of strategic recommendations and policy discussions which may lack a statistical element, hence the qualitative analysis model.

Background to the study

The Zimbabwean financial sector has been characterized by a period of financial market uncertainty and dwindling depositor confidence. Some of the policy changes and operational loopholes led to bank failures. A number of financial institutions (e.g. Trust Bank, Royal Bank and Time Bank) were placed under curatorship with some falling into liquidation. This period shook the financial sector and led to some mergers, disintegration and total change of operations for some market players. The change in the profile of banking operations come with different forms of financial risks which place a challenge to traditional treasury management. The regulatory environment has not been stable. In...