Measuring systemic risk for Zambia’s banking institutions: a proactive approach.
Date
2025
Authors
Kaluba, Chresta Chitoba
Journal Title
Journal ISSN
Volume Title
Publisher
The University of Zambia
Abstract
This study develops a proactive approach to measuring systemic risk in Zambia’s banking institutions, addressing the inadequacies of existing methodologies that rely on stock market data and focus primarily on the industry as a whole rather than individual institutions. Using a combination of case study analysis and quantitative research, data from Zambian commercial banks between 2010 and 2022 was analysed to identify patterns of vulnerability and resilience during systemic shocks. The research proposes a novel Systemic Vulnerability Score (SVS), a forward-looking metric that quantifies a bank's susceptibility to systemic risk using publicly available data. Key findings reveal that systemic shocks, such as the 2015 copper price drop and the COVID-19 pandemic, impacted all banks but with varying intensity. Factors like liquidity management, asset growth, and equity stability were significant in determining resilience. The SVS effectively distinguished systemically vulnerable banks from resilient ones, demonstrating its
utility for both strategic planning and regulatory oversight. This study’s significance lies in bridging the gap between theory and practice in systemic risk management for emerging markets. By offering a robust, institution-focused model, it empowers financial institutions to identify vulnerabilities and implement strategic risk mitigation measures proactively. For policymakers and regulators, the findings provide a critical tool for fostering stability and resilience in Zambia’s banking sector.
Description
Thesis of PhD in Business and Management.