Risk governance & control: financial markets & institutions / Volume 7, Issue 3, Summer 2017 65 AN ANALYSIS OF THE IMPACT OF LIQUIDITY CONSTRAINTS ON NEW FINANCIAL PRODUCT DEVELOPMENT: CASE OF ZB BANK N. Wadesango*, L. Nani*, C. Mhaka**, V.O. Wadesango* * University of Limpopo, Turfloop Campus, Polokwane, South Africa ** Midlands State University, Gweru, Zimbabwe Abstract How to cite this paper: Wadesango, N., Nani, L., Mhaka, C., Wadesango, V.O. (2017). An analysis of the impact of liquidity constraints on new financial product development: case of ZB bank. Risk governance & control: financial markets & institutions, 7(3), 65-76. doi:10.22495/rgcv7i3p7 How to access this paper online: http://dx.doi.org/10.22495/rgcv7i3p7 Copyright © 2017 The Authors This work is licensed under the Creative Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0). http://creativecommons.org/licenses/b y-nc/4.0/ ISSN Online: 2077-4303 ISSN Print: 2077-429X Received: 24.02.2017 Accepted: 26.05.2017 JEL Classification: G21, O16 DOI: 10.22495/rgcv7i3p7 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. Keywords: Indigenous Banks, Liquidity, Financial Products, Commercial Banks 1. INTRODUCTION Many organisations are venturing into innovation and, specifically, new product development to seclude themselves from recession and put them back into growth (Silva, 2011). In such cases, this requires companies to strengthen and reorganise their product innovation capabilities. Most managers of different organisations, mainly in developing countries, often mention financial constraints as the core impediment to their investment, t h e i r internationalization e f f o r t s plus growth. New product development may have led market participants into believing that they could, on a lasting basis, evade financial constraints and rely on the liabilities allotted by other institutions to satisfy their liquidity needs (Bervas, 2011). Empirical studies have shown that financial frictions have a negative effect on the propensity of organisations to innovate (Savignac, 2008; Blanchard et al., 2012). Furthermore, some literature highlights how the different types of constraints impede innovation, especially financial constraints which importantly can result in macroeconomic consequences (D’Este et al., 2012; Segarra et al., 2013). Bervas (2011) indicates that financial constraints are critical in that they may b e pointers to the reinforcement of other obstacles to innovation. Given the uncertainty and challenges in the current financial market, it is important to analyse the impact of liquidity constraints in order to successfully develop new products. This research focuses on the impacts of financial constraints in the development of new financial products from the period of 2012 up to 2015. It also aims to quantify the regulatory constraints that commercial banks were encountering in developing new successful products. The study’s motive was therefore to investigate the impact of liquidity constraints on