In the 1920s, the United States of America encountered unusual bank failures that had a ripple effect on other continents, including Africa and Asia. Among the African nations most severely impacted by bank collapses were Zimbabwe, Kenya, Nigeria, and South Africa. An increase in non-performing loans was the primary factor found in each case. In Zimbabwe, this issue arose following its independence in 1980 and has persisted despite multiple interventions by the Central Bank of Zimbabwe to modify lending policies. The overarching study aim is to establish how effective these loan models are in ensuring the sustainable performance of Commercial Banks. To address these concerns, the efficiency of the loan models was examined using a sequential explanatory design using a mixed-method approach. A standardized questionnaire with a 5-point Likert scale was employed for the quantitative phase of data gathering. Using a stratified sampling technique, data were gathered from 406 participants employed by 14 Commercial Banking Institutions in Zimbabwe. Using AMOS v. 24.0 and SPSS version 24.0, this collected data was examined to produce descriptive and inferential statistics. For a more thorough comprehension and explanation of the survey results, a structured interview was utilised in the qualitative phase of the research approach with both current and former chief risk officers. Structural Equation Modelling provided estimates of the strength of all hypothesised relationships, where necessary, whilst Novel was used to analyse qualitative data. The Credit Score model has been embraced by many banks, according to the statistics, while the Z-score model has been employed the least. The results revealed that a loan model’s characteristics can, in certain cases, affect the model’s efficacy throughout the loan cycle. There is a negative correlation between various loan models and theories of credit risk. In addition, non-performing loans result from parameters in the loan model being inadequate; these parameters are typified by old models, unfavourable markets, insufficient cash flows, and improper use of a loan model as the bankers perceived the problem. The findings have implications for commercial banks, one of which is that loan models should be reviewed frequently to manage credit risks resulting from the present business environment.
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