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All Journal DIJB (Diponegoro International Journal of Business) Business and Finance Journal
Mbedzi, Edson
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Decision Sciences, Operations Research & Management Economics, Econometrics & Finance

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Assessing the impact of credit conditions on household well-being through repayment pressures in Botswana and Zimbabwe. Musandipa, Costa; Nkala, Peter; Malunguza, Noble; Mbedzi, Edson
Diponegoro International Journal of Business Vol 8, No 2 (2025)
Publisher : Department of Management | Faculty of Economics and Business | Universitas Diponegoro

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.14710/dijb.8.2.2025.145-155

Abstract

Amidst tightening global monetary conditions, this study investigates how repayment distress functions as a transmission channel between interest rate fluctuations and household financial well-being (HFWB) in Botswana and Zimbabwe. Drawing on Credit Market Theory, Debt Overhang perspectives, the Financial Accelerator and Financial Stability frameworks, the analysis applies a novel tree-based mediation approach to assess the interplay among borrowing costs, loan performance and human development outcomes. Empirical results reveal a pronounced mediating effect in Botswana (Indirect Effect = -0.0581; R² = 0.963), suggesting that non-performing loans (NPLs) amplify the adverse consequences of rising interest rates for households. Conversely, Zimbabwe exhibits a weaker mediation pathway (Indirect Effect = -0.0000; R² = 0.784), shaped by macroeconomic volatility, hyperinflation and dependence on informal credit markets. These findings underscore the importance of context in shaping credit risk and monetary transmission. Policy implications point to strengthening regulatory oversight and NPL management in Botswana, while in Zimbabwe, macroeconomic stabilization and formal credit deepening are critical. By offering one of the first comparative applications of tree-based mediation modelling in Sub-Saharan Africa, this study contributes new empirical evidence to debates on financial inclusion, household vulnerability and development in low- and middle-income economies.
CONTRASTING FINANCIAL ECOSYSTEMS: A COMPARATIVE ANALYSIS OF LOAN DELINQUENCY'S DIVERGENT PATHWAYS TO HOUSEHOLD WELL-BEING IN BOTSWANA'S RESILIENCE AND ZIMBABWE'S VOLATILITY Musandipa, Costa; Nkala, Peter; Malunguza, Noble; Mbedzi, Edson
Jurnal Bisnis dan Keuangan Vol 10 No 2 (2025): Business and Finance Journal
Publisher : Universitas Nahdlatul Ulama Surabaya

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.33086/bfj.v10i2.7746

Abstract

Households in many countries continue to experience historically low savings rates, rising loan delinquencies, and inadequate long-term financial planning, underscoring persistent concerns about household financial well-being (HFWB). Despite extensive scholarly attention, the relationship between loan delinquency and HFWB remains inconclusive due to inconsistent empirical findings and the broad conceptual scope of prior studies. Addressing this gap, the present study aims to examine the association between loan delinquency measured through non-performing loans (NPLs) and HFWB measured using human development indices in the contexts of Botswana and Zimbabwe. Employing a quantitative research design, the study applies Generalized Additive Models (GAMs) to capture potential non-linear dynamics between the variables. The results show that although economic growth substantially enhances HFWB, its benefits can be attenuated by rising loan delinquency. There are also counterintuitive findings, particularly the direct effect of NPLs on HFWB in Botswana, indicating the need for further qualitative investigation and refinement of HFWB metrics. These findings highlight the importance of strong institutions, effective regulatory frameworks, and proactive credit risk management in building financial resilience. The study offers policy recommendations for governments, financial institutions, and households to foster sustainable improvements in financial well-being.
Co-Authors Malunguza, Noble Musandipa, Costa Nkala, Peter