Sectoral Credit Concentration and Bank Performance in Zambia

Banks’ choice regarding credit portfolio composition is a rational strategy to manage risk and enhance performance. Thus, sectoral credit concentration has implications on the banks’ risk taking behaviour and profitability. This paper assesses the effect of credit concentration and risk in Zambia, using bank-level data. Zambia’s financial sector reforms have been widely acclaimed, but there are visible contradictions between expectations of these reforms and actual outcome in terms of the banks’ conduct.