An Evaluation of the Global Liquidity Crisis of 2007- 2008 on the banking Industry. A Case Study of the Central Bank of Zambia

Abstract

The purpose of this study is to conduct a detailed evaluation of Liquidity Crisis in Zambia with particular reference to the impact of the 2007-2008 Global Financial Crisis. The research will also seek to find out the impact of the Liquidity Crisis on the economy and more specifically the banking industry in Zambia. Ultimately, this study will explore measures to reduce Liquidity Crisis in the banking industry in Zambia, especially in the wake of the past Global Economic Crisis. The study will employ a mix of both qualitative and quantitative research methods. Data will be obtained from sources such as the Case Study of Zambia during the Global Financial Crisis and the review of secondary data, especially that provided by the Central Bank, Bank of Zambia. The main finding of the study indicated that a liquidity crisis has a devastating impact on the banking industry, especially in terms of performance and ability to lend, ultimately leading to a slowdown of the overall economy. The main limitation of the study was the insufficiency of information relating specifically to the recent Global Financial Crisis and its impact on the Zambian banking industry. The study recommends that the Zambian government, through the central bank, should apply measures that will spur growth, while reducing risk from external economic forces. It concludes that the central bank has the role of overseeing the overall economic landscape and thus, reflecting the working dynamics of the government.