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The Case for Financial Sector Liberalization in Ethiopia

Author

Listed:
  • Kozo Kiyota

    (Yokohama National University and University of Michigan, Ann Arbor)

  • Barbara Peitsch

    (University of Michigan, Dearborn)

  • Robert M. Stern

    (University of Michigan, Ann Arbor)

Abstract

This paper focuses on issues of financial sector liberalization in Ethiopia, with reference in particular to the Ethiopian banking sector. We identify two factors that may constrain Ethiopia’s financial development. One is the closed nature of the Ethiopian financial sector in which there are no foreign banks, a non-competitive market structure, and strong capital controls in place. The other is the dominant role of state-owned banks. Our observations suggest that the Ethiopian economy would benefit from financial sector liberalization, especially from the entry of foreign banks and the associated privatization of state-owned banks.

Suggested Citation

  • Kozo Kiyota & Barbara Peitsch & Robert M. Stern, 2007. "The Case for Financial Sector Liberalization in Ethiopia," Working Papers 565, Research Seminar in International Economics, University of Michigan.
    • Handle: RePEc:mie:wpaper:565
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    File URL: http://www.fordschool.umich.edu/rsie/workingpapers/Papers551-575/r565.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ghirmai T Kefela, 2008. "Regulatory Challenges Strategically Enhance Banking Efficiency and stability: The study of East African countries," Indus Journal of Management & Social Science (IJMSS), Department of Business Administration, vol. 2(2), pages 129-147, December.
    2. Arnaldo MAURI, 2011. "A nationalization of a bank of issue carried out in a soft way: the case of the establishment of the Bank of Ethiopia," Departmental Working Papers 2011-01, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    3. Wesen Legessa Tekatel & Beyene Yosef Nurebo, 2019. "Comparing Financial Performance of State Owned Commercial Bank with Privately Owned Commercial Banks in Ethiopia," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 5(2), pages 200-217.
    4. Beck, T.H.L. & Hoseini, Mohammad & Uras, Burak, 2018. "Trade Credit and Access to Finance of Retailers in Ethiopia," Other publications TiSEM 8fe674b3-e591-429d-b283-3, Tilburg University, School of Economics and Management.

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    More about this item

    Keywords

    foreign banks; state-owned banks; financial sector liberalization; Africa; Ethiopia;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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