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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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    References listed on IDEAS

    as
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    More about this item

    Keywords

    foreign banks; state-owned banks; financial sector liberalization; Africa; Ethiopia;

    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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