ABSTRACT

                  “             The banking sector in Zimbabwe recently witnessed closure of several banks. It is important to note that although there are many reasons for such bank closures; information asymmetry is also one of the issues that led to bank failure and the consequent closure of banks in Zimbabwe. This paper looks at how information asymmetry could be subscribed to bank closure in Zimbabwe. The paper, amongst other possible solutions to information asymmetry; encourages players in the banking sector to reduce information asymmetry by properly gathering and analyzing information about borrowers.

Key Words: Adverse selection, Banking sector, Bounded rationality, Credit rationing, Information asymmetry, Interest rate, Moral hazard, Zimbabwe