Bank Stability and Its Determinants in the SADC Region

Abstract

Financial stability is a state in which the financial system, which consists of the financial markets and the institutional framework supporting the financial sector, is resilient to economic shocks. The banking sector is the most significant component of the financial system, contributing significantly to macroeconomic, company, and industry growth. The objective of the current study is to evaluate bank stability and its determinants among SADC banks. The study established that bank stability in the SADC region is positively determined by bank size, profitability, and technical efficiency. Funding risk harms bank stability. The study recommends that the shareholders and regulators ensure banks are adequately capitalized, remain profitable, and continue enhancing the efficiency of their operations. Banks are supposed to utilize funding mechanisms that don’t jeopardize the stability of the banks.