A Critique of the Influence of the Loan Model on Asset Quality in Zimbabwe Commercial Banks

This paper investigates the influence of several loan models, namely Credit Score, Z-Score, and Asset-Based Lending, on asset quality in Zimbabwean commercial banks. The study was driven by constant challenges, including high non-performing loan (NPL) ratios, economic volatility, regulatory inconsistency, and limited borrower credit histories. In Zimbabwe's particular macroeconomic context, the study assesses loan performance using a mixed-methods approach, combining quantitative surveys (n = 406) with qualitative interviews with 24 risk officers. Results show that although proactive loan modelling improves client assessment and lowers credit risk, outside variables, including inflation, political unrest, poverty, and limited technology, compromise model performance. Based on factor analysis, strong credit risk control depends on proactive and reactive elements. The study finds that in Zimbabwe's banking environment, model fit rather than lifetime determines effectiveness. To raise asset quality and lower NPLs, it advocates more model integration, ongoing observation, and alignment with economic reality.