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The Case for Financial Sector Liberalization in Ethiopia

  • 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)

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.

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Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 565.

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Length: 34 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:mie:wpaper:565
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