AN ANALYSIS OF THE IMPACT OF LIQUIDITY CONSTRAINTS ON NEW FINANCIAL PRODUCT DEVELOPMENT: CASE OF ZB BANK

摘要

The study investigated the impact of liquidity constraints on development of new financial products in commercial banks. The descriptive research design was adopted and a case study of ZB Bank employed. A census sampling technique was adopted and questionnaires and interviews were self-administered by the researchers. Research outcomes proved that liquidity constraints are a major impediment to firm`s innovativeness. Financial project innovations are either not started, delayed or abandoned, but mostly the distribution and delivery of developed services for financial products are highly affected. The results of this study have contributed to existing literature in revealing that financial regulation tends to be another constraint for commercial banks discouraging product innovations. Rapid technological changes seem to fuel the need for new software and hardware for new product development thus necessitating the employment of a skilled workforce for new product development. Furthermore, customer demands are changing on a daily basis due to rapid changes in information technology thus making customer maintenance difficult for commercial banks. Based on the data gathered, the researchers concluded that there is a negative impact on new financial product development due to liquidity constraints. In such constrained times, we recommend that commercial banks should emphasize more the best technique suitable for successful new product development or invest their available funds in the development thereof.