This report is a comprehensive research of insurance industry in ethiopia. In ethiopia cash is still the most dominant medium of exchange and electronic banking is not well known, let alone used for transacting banking issues. A large percentage of mergers fail due to various reasons, yet companies continue to get married. Called the bank of abyssinia, or in amharic yeityopya bank, it was an affiliate of the national bank of egypt, and was founded in 1905. Overcoming constraints in the manufacturing sector public disclosure authorized public disclosure authorized public disclosure authorized public disclosure authorized. The definition of a bank varies from country to country. The paper describes and analyses the reconstruction process of the. A bank is a financial institution that accepts deposits from the public and creates demand deposit. The structure and performance of ethiopias financial. Commercial bank of ethiopia is the largest, controlling the majority assets of the industry. Electronicbanking in ethiopia practices, opportunities and.
The monopoly governmentowned banks in ethiopia remained relatively. In example, the commercial bank of ethiopiathe largest bank in the country whose assets represent about 70% of the sectoraccounts for 67% of total deposits and 55% of loans and advances. The 1974 revolution brought major changes to the banking system. This period witnessed the establishment, as most readers will know, of the countrys first bank. The study was conducted based on the data gathered from four banks in ethiopia. In general the trend is to move away form a dominant public sector towards a financial structure where the role of the private sector is becoming increasingly important. Ethiopias history since the 1970s clearly shows the validity of this statement.
Due to their importance in the financial stability of a country, banks are highly regulated in most countries. This paper has examined the history of the ethiopian banking system. Industry environment is the set of factors that directly influence a firm and its competitive actions and response. The financial sector in ethiopia is composed of the banking industry, insurance companies, microfinance institutions, saving and credit cooperatives and the informal financial sector. Gardachew worku, electronic banking in ethiopia, opportunites and challnges.
Founded in 1997, wegagen bank is one of the banks in ethiopia that offers a wide range of banking products and services, including deposittaking, loan facilities, international banking services, local and international money transfer services, and specialized payment services. Banks in ethiopia overview and guide to banks in ethiopia. Porters five force analysis for the abc bank an industrys profit potential is a function of the five forces of competition threats of new entrants new entrants in the banking industry is impossible to enter the. The government had created addis bank from the merger of the newly.
In banking industry, eservices are revolutionizing the way business is conducted. The birth and development of banking services in ethiopia. Visit for more related articles at journal of internet banking and commerce. The history of banking and other financial institutions in ethiopia free download as word doc. Pdf the structure and performance of ethiopias financial sector. All epayment methods share a number of common characteristics. Doc the history of banking and other financial institutions. This event marked the introduction of banking in the country. To analyze the status of electronic banking in ethiopia to investigate the main challenges and opportunities for ebanking in ethiopia. The structure and performance of ethiopias financial sector in the pre. Ethiopian banking system is one of the most underdeveloped compared to the rest of the world. This paper discusses the role that has been played by the banking system especially after the arrival of private investors in the sector.
Electronic banking includes conducting banking activities using information and telecommunication technologies. Addis ababa i think we do not have a competitive but rather a cooperative advantage, says meaza ashenafi, who is the chairperson of enat bank an ethiopian privately owned bank established with an intention of empowering women of ethiopia. The paper examines the practices, opportunities and challenges of ebanking services in ethiopia. When banks merge by considering it as a strategy for business diversity and growthsynergy, its based on voluntary ground. Currently there are 17 commercial banks in ethiopia, one state owned and 16 private. Gardachew worku, electronic banking in ethiopia, opportunites and challnges of e banking in ethiopia, internet banking in ssa, ethiopia.
Review article on impact of atm service on customer. For anyone considering a banking career in ethiopia, this list of banks in ethiopia is a helpful guide on where to start. See the relevant country pages for more information. In most cases, the dominant bank commercial bank of ethiopia still seizes quasimonopoly power. Companies merge with or acquire other companies for various reasons, among which include growing their portfolio, entering new markets, or acquiring talentsskills. The commercial bank of ethiopia cbe is the largest commercial bank in ethiopia as of june 2015, it had about 303. The three private banks, banco di roman, banco di napoli and the addis ababa bank s.
Structure of the financial sector in ethiopia, rural financial systems in. This banking panic spurred debate for banking reform. The goe allowed the establishment of private banks and insurance companies in 1994, but does not yet permit foreign ownership in this sector. The banking industry accounts for about 95% of the total financial sector assets, implying that the financial sector is. Ethiopian banking history, in its modern sense, began towards the end of the reign of emperor menilek. The legal and regulatory framework on merger of banks in ethiopia.
The structure and performance of ethiopias financial sector 5 clearly there is evolving structural shift when deposit is observed by institutions. This paper highlights development of ethiopian banking from the beginning of xx century to 1936. The banking industry accounts for about 95% of the total financial sector assets, implying that the financial sector is undeveloped. To start with, the researcher accepts the universal argument that banks are. Responding to the shocks direct and indirect of covid19 slowdown front page africa. Before the merger, the foreign participation of these banks was.
Law of banking, negotiable instruments and insurance prepared by fasil alemayehu and merhatbeb teklemedhn 4 this material heavily depends on the commercial code of ethiopia, which is the main law governing these areas. In section two a brief overview of banking history in ethiopia is made. There is also the development bank of ethiopia, which is not considered a commercial bank. To start with, the researcher accepts the universal argument that banks are unique from other business organizations. By virtue of a very important banking law, the existing state bank of ethiopia ceased operations and was replaced by two new institutions, the national bank of ethiopia and the commercial bank of. Electronicbanking in ethiopia practices, opportunities. This will be followed by section three where the analysis of the financial. Morgan, and ferrari for aspiring investment banking professionals. Banking reform in ethiopia charles harvey summary the monopoly governmentowned banks in ethiopia remained relatively sound throughout the period of socialist government. Though the state owned banks are only three about one sixth of the total number of banks they still dominate the whole banking system in ethiopia. The stateowned commercial bank of ethiopia cbe dominates the market in terms of assets, deposits, bank branches, and total banking workforce. This institution was engaged in issuing notes as well as in any kind of commercial banking business. The history of banking and other financial institutions in ethiopia. Origins and early development of banking in ethiopia by.
In fact, the history of banking in ethiopia dates back to the turn of the century, when, in1905, the bank of abyssinia was established in addis ababa, under the reign of menelek ii. Financial regulation and supervision in ethiopia by alexander. It is a democratic federation of nine states, governed by a bicameral legislature with 656 representatives combined, a prime minister and a president. To recommend appropriate actions to be taken to promote ebanking in ethiopia. Oct 24, 2009 in order to promote and develop viable e banking in ethiopia, they should clearly chart out the time schedule for their integration and technological advancement. Financial sector in ethiopia ethiopian bankers association. Furthermore, iddir is a local association with long history, most widespread.
The other governmentowned bank is the development bank of ethiopia dbe, which provides loans to investors operating in priority sectors. Liberalisation of the banking industry in tanzania. Various issues and prospects in the industry are examined. Banking in ethiopia started in 1905, with the establishment of the bank of abyssinia that. Accordingly, the three private owned banks, addis ababa bank, banco di roma and banco di napoli merged in 1976 to form the second largest bank in. No of branches swift gross profit etb million net profit etb millions 1. Electronic banking is a form of banking business that provides banking services to individuals and corporate entities, which are offered and performed with the use of computer networks and telecommunications media electronic support. Thank you for reading cfis overview of ibanking and how the industry works. In terms of contestability, the ethiopian banking industry can be characterized as incontestable as entry in the industry. The study is concerned with a crucial period of the banking history of ethiopia, almost untouched so far by the specializing literature, in which the banking industry was affected by important changes. Most nations have institutionalized a system known as fractional reserve banking under which. Lending activities can be performed either directly or indirectly through capital markets.
The shareholders of the company or companies, as the case may be will have substantial shareholding in the merged company. The chapter begins with an overview of the countrys economic status and describes the major social and macroeconomic performance for the study period 2004. In ethiopia cash is still the most dominant medium of exchange and electronicbanking is not well known, let alone used for transacting banking issues. Factors affecting adoption of electronic banking system in ethiopian banking industry ayana gemechu bultum1 abstract the aim of this paper is to identify factors that affect adoption of e banking in the ethiopian banking industry.
History of northern ethiopia and the establishment of the italian colony or eritrea. In addition, it restructured the two development banks as commercial banks, and introduced a new banking and monetary proclamation that gave more autonomy and further clarified the national bank of ethiopias activities as the. The ethiopian banking industry can be characterized as highly profitable, concentrated and moderately competitive. Under english common law, a banker is defined as a person who carries on the business of banking by conducting current accounts for his customers, paying cheques drawn on himher and also collecting cheques for hisher customers. The first two chapters of the report feature the country profile by giving general information on ethiopia and by thoroughly studying its economic state, including key macroeconomic indicators and their development trends. In addition, it restructured the two development banks as commercial banks, and introduced a new banking and monetary proclamation that gave more autonomy and further clarified the national bank of ethiopias activities as the regulator and supervisor of the banking sector. The structure and performance of ethiopias financial sector 3. The history of currency and banking in ethiopia and the horn of africa from the middle ages to 1935, ethiopia observer, n. Electronic banking is an attempt to merge a number of different technologies electronic cash, atm, poseftpos. G revisiting the ethiopian bank corporate governance system lgd 201 2 refereed article abstract the overall standard of corporate governance in ethiopia is inadequate. The application of software and technology is inevitable in the present competitive banking industry. A history of early twentieth century ethiopia, richard pankhurst, 1997. Ethiopian bankers perception of electronic banking in. Ethiopia banking industry news monitoring service from ein news.
From banking industry in ethiopia gemechu abdissa shuremo department of management, mizantepi university, ethiopia gemechu. Pdf one of the main objectives of financial institutions such as banks is. Despite the problems, the domestic banking sector posted its highest growth rate in six years, along with accelerated branch expansions. Ethiopia country procurement assessment report, june 28, 2002 1 executive summary and recommendations context of the cpar background 1.
The ethiopian banking sector is currently comprised of a central bank the national bank of ethiopia or nbe, one state owned development bank, a government owned commercial bank and sixteen private banks. Ma gillivray, representative of the british owned national bank of egypt. In addition, it restructured the two development banks as commercial banks, and introduced a new banking and monetary proclamation that gave more autonomy and further clarified the national bank of ethiopias activities as the regulator and. Strict regulations and increasing rental fees highlight the difficulty that private banks face in trying to grow the number of branches they operate throughout the country. The human capital index hci database provides data at the country level for each of the components of the human capital index as well as for the overall index, disaggregated by gender.
Half strategy of gradualism in reform, 20012017 working paper pdf available. Factors affecting adoption of electronic banking system in ethiopian banking industry ayana gemechu bultum1 abstract the aim of this paper is to identify factors that affect adoption of ebanking in the ethiopian banking industry. Ebrs samson hailu explores the reasons why this problem has come about and what should be done to solve it. Structure of the ethiopian financial market universiteit van. The early history of banking in ethiopia, with its distinctive mixture of foreign. The monetary and banking proclamation no 831994, the licensing and. Evaluation of the financial performance of banking sectors. Origins and early development of banking in ethiopia. The history of atm can be traced back to the 1960s, when.
This indicates that the ethiopian financial sector is highly controlled by the government, a finding that is consistent with dailami 2000, who ranked ethiopia as the most closed country in. Banking and finance commercial bank of ethiopia posted a record 8. Financial regulation and supervision in ethiopia by. The case for financial sector liberalization in ethiopia. Prior to the emergence of the marxist government, ethiopia had several stateowned banking institutions and private financial institutions. Revisiting the ethiopian bank corporate governance system. However, before the introduction of the modern banking system in ethiopia, traditional financial institutions such as equb and idir has contributed a lot in sharing risks, developing saving habits and by positively impacting on the economic. Factors affecting adoption of electronic banking system in. It then merged the addis bank with the commercial bank of ethiopia s. It was liquidated and replaced by the bank of ethiopia which was the. The new york stock exchange dropped dramatically as everyone tried to get their money out of the banks at the same time across the nation.
The banking sector in ethiopia has been dominated by the stateowned commercial bank of ethiopia cbe. The cbe was established in its present form by a merger of one of the. Ethiopia is an important country with a growing economy. In fact, the history of banking in ethiopia dates back to the turn of the century, when, in 1905, the bank of abyssinia was established in addis ababa, under the reign of menelek ii. Development bank of ethiopia carbon initiative for development cidev component 3 of ethiopia additional financing for energy access project environmental and social management framework esmf for ethiopia offgrid renewable energy program and ethiopia clean cooking energy program final february 2017 addis ababa, ethiopia.
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