With the italian occupation 19361941, the operation of the bank of ethiopia came to a halt, but a number of italian financial institutions were working in the country. The structure and performance of ethiopias financial sector 3 commercial and central bank until 1963 when it was dissolved into todays national bank of ethiopia the central bank, re established in 1976 and the commercial bank of ethiopia, cbe henceforth. History of banking and finance goes back to the early stage of the human civilization, when it was growing in the cradles of different cultures. Access to finance in ethiopia microfinance gateway. The financial in stitutions reform, recovery, and enforcement act of 1989. The bank revenue highly explained by price of fund than other input prices, that.
An examination of the banking crises of the 1980s and early 1990s volume i 88 history of the eightiesslessons for the future 3 daniel gail and joseph norton. Insurance companies underwrite economic risks associated with death, illness, damage to or loss of property, and other risk of loss. History of finance globalization is circulating the western form of finance in the whole universe. The oromo moved north through the southern highlands, bypasssing the sidama on the west, and into the central highlands, where they settled in the center and west on land, some. The association of ethiopian microfinance institutions, the coauthor if this study, and dr wolday amha and his staff have been a permanent and highquality supporting agency in this process. To recommend appropriate actions to be taken to promote ebanking in ethiopia. It has reestablished the national bank of ethiopia nbe as central bank and fi nancial market regulator and opened the banking and insurance sector s for domestic private inve stment through monetary. 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 bank of ethiopia opened branches in dire dawa, gore, dessie, debre tabor and harrar. The paper examines the evolution up to the beginning of the 70s of the ethiopian banking system. The history of banking and other financial institutions in. Strong and integrative leadership is one of the keys for keeping mfas together. The bank of abyssinia, a private financial institution established in 1905 in cairo under egyptian law, was given a 50years concession for carrying out banking activity in ethiopia by the emperor. Origins and early development of banking in ethiopia request pdf. Prior to this proclamation, the bank used to carry out dual activities, i. Section 4 focuses on entering of other financial institutions into the ethiopian. A brief history of regulations regarding financial markets in the united states. The structure and performance of ethiopias financial.
The structure and performance of ethiopia s financial sector 3 commercial and central bank until 1963 when it was dissolved into todays national bank of ethiopia the central bank, re established in 1976 and the commercial bank of ethiopia, cbe henceforth. We identify two factors that may constrain ethiopias financial development. The early history of banking in ethiopia, with its distinctive mixture of foreign and government financial institutions, is briefly described in section 2. The financial sector in ethiopia consists of formal, semiformal and informal institutions. That is, they help connect borrowers and lenders of funds. Types and roles of formal financial institutions providing agricultural credit objective. Yinager dessie is the current governor of the bank. The 5 largest banks, which are all stateowned, account for 90% of all banking assets and just one commercial bank of ethiopia cbe owns 70% of deposits.
The roles of such banks are paramount in developing countries like ethiopia where the financial market is underdeveloped and none existed. To learn more, see our list of financial institutions companies lists of the main players in corporate finance. The sector is the backbone of economy in the country jain and jaiswal, 2016. The chapters have discussed the history, current state, structure, policy and. Deepening the financial sector in the long run partly depends on financial institution s ability to track repayment history that requires. Many financial institutions play the role of a financial intermediary. 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. Other financial institutions operating in the economy includes 17 insurance companies, one pension fund and about 31 micro finance institutions with a business focus mainly in the rural areas but in reality concentrated in urban area. The informal and semiformal financial sectors in ethiopia. Ethiopia is one of the poorest and most underdeveloped countries of the world. History of financial institutions contributes to the analysis of how the modern corporation, business and finance have shaped and keep on shaping our world. Thus, the notion of one size fits for all is not to do with banking competition, making it one of the most indistinct economic areas. Later, in ancient greece and during the roman empire, lenders based in temples gave loans, while accepting deposits and performing the change of money. Library of congress federal research division country profile.
The ethiopian banking system by arnaldo mauri ssrn. The national bank of ethiopia nbe is the central bank of ethiopia. Nonbank financial institutions assets to gdp for ethiopia. Uvadare digital academic repository financial market. In 1024, the first paper currency was issued by the state in sichuan. Half strategy of gradualism in reform, 20012017 working paper pdf available. Ethiopia, the construction and business bank, and the development bank of ethiopia. Financial institutions this section will introduce you to the major kinds of financial institutions. Pdf the short life of the bank of ethiopia researchgate. Origins and early development of banking in ethiopia.
The saving and credit cooperative are considered as semiformal financial institutions, which are not regulated and supervised by national bank of ethiopia nbe. The formal financial system is a regulated sector which comprises of financial institutions such as banks, insurance companies and microfinance institutions. We identify two factors that may constrain ethiopia s financial development. Public disclosure authorized access for all world bank. The case of the association of ethiopian microfinance.
Graph and download economic data for non bank financial institutions assets to gdp for ethiopia dddi03eta156nwdb from 1998 to 2006 about nonbank, ethiopia, finance companies, companies, finance, financial, assets, and gdp. Three stateowned banks still have a share of about 85% of all credits, six recently created private banks are mainly active in the urban areas. The bank was authorized to combine the functions of central banking issuing currency notes and coins and commercial banking. Weve got lists of the most important financial services companies, banks, institutions, accounting firms, and. These were banco di roma, banco di napoli and banca nazionale del lavora. Currently there are 17 commercial banks in ethiopia, one state owned and 16 private. This paper discusses the role that has been played by the banking system especially after the arrival of private investors in the sector. Oct 21, 2019 graph and download economic data for nonbank financial institutions assets to gdp for ethiopia dddi03eta156nwdb from 1998 to 2006 about nonbank, ethiopia, finance companies, companies, finance, financial, assets, and gdp. Ethiopia the agreement that was reached in 1905 between emperor minilik ii and mr. With more than 60 million inhabitants, it has one of the largest populations in ssa.
This intermediation role of banks takes different forms in different economic systems. The new bank, bank of ethiopia, was a purely ethiopian institution and was the first. The unexpectedly limited impact of the post1975 policy changes on the quality of bank lending and management, and therefore solvency, is analysed in section 3. The national bank of ethiopia was established in 1963 by proclamation 206 of 1963 and began operation in january 1964. The development bank of ethiopia dbe is a specialized bank in project financing and is not a deposit taking. Oct 09, 2019 the roman empire eventually crumbled, but some of its banking institutions lived on in the form of the papal bankers that emerged in the holy roman empire, and with the knights templar during the. Fis 0112012 by abrham yohannes on march 9, 20 8 comments licensing and supervion of the business of financial instituions download. To analyze the status of electronic banking in ethiopia to investigate the main challenges and opportunities for ebanking in ethiopia. National bank of egypt havingbeen entrusted of the project, the new institution was.
Banks in ethiopia overview and guide to banks in ethiopia. A commercial bank is a type of financial institution that accepts deposits, offers checking account services, makes business, personal and. See the relevant country pages for more information. Its goals are to stabilize the nations currency, keep unemployment low, and prevent inflation. Its headquarters are in the capital city of addis ababa. Liberalisation of the banking industry in tanzania. Present the different types of financial intermediaries operating in the agricultural sector of developing countries with a specific accent on their institutional roles, typical performances and effectiveness in servicing the agricultural customer. As in other countries, ethiopia shows that the legislation is a strong motor for mfa creation. The history of banking began with the first prototype banks which were the merchants of the world, who gave grain loans to farmers and traders who carried goods between cities. We work toward a world in which microfinance is no longer viewed as a marginal or niche sectora world where poor people are considered valued clients of their countrys financial system, where an array of financial. Ma gillivray, representative of the british owned national bank of egypt marked the introduction of modern banking in ethiopia.
The fourth section gives a summary of the banking policy reform measures introduced by the current ethiopian government. This makes the analysis of the health and soundness of deposit takers central to any assessment of financial system stability. Unlike in other african countries, the distinguishing imprint of a single colonial. The history of banking and other financial institutions in ethiopia free download as word doc. One of the main objectives of financial institutions such as banks is mobilizing resources in particular, domestic savings and channelling these to wouldbe investors. Financial analysis of banking institutions 3 framework normally used in this process is a set of financial accounts. It contrasts with regional and international peer countries where banking industries have a much higher share of private sector and foreign participation. The case of ethiopia ethiopia has conducted financial sector reform following the change in government and economic policy in 1991. All epayment methods share a number of common characteristics. British even in the unlikely event of a coalition among all other board members, european. The history of banking and other financial institutions i n ethiopia the. The world bank public disclosure authorized ethiopia. The history of banking is intertwined with the history of money.
The history of banking began when empires needed a way to pay for foreign goods and services, with something that could be exchanged more easily. Electronicbanking in ethiopia practices, opportunities and. A brief history of regulations regarding financial markets in. Financial statements are therefore the starting point of bank financial appraisal.
This is true even in the financial sphere, where, given the backward initial conditions, it was necessary to have large recourse to foreign assistance and cooperation in setting up banking institutions. Now 26% of adults save at financial institutions as compared to 14% in 2014 and 11% borrow from financial institutions as compared to 7% in 2014. The history of banking and other financial institutions in ethiopia the agreement that was reached in 1905 between emperor minilik ii and mr. The history of currency and banking in ethiopia and the horn of africa from the middle ages to 1935, ethiopia observer, n. Explanations, types, and implications prepared by stijn claessens and m. 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 ethiopian context, one cannot confidently argue that. Regulation of mobile and agent banking services national bank of ethiopia directives no. History of banking in ethiopia, bank of abyssinia, bank of ethiopia 1. Binyam teshomeworld bank the world bank group wbg, with private and public sector partners, set an ambitious target to achieve universal financial access ufa by 2020.
The bank is active in promoting financial inclusion policy and is a member of the alliance for financial inclusion afi. The respective mfa in mali is aemfi association of ethiopian microfinance institutions. In fact, the history of banking in ethiopia dates back to the turn of the century. Section three summarizes studies that relate the association between financial lending institutions and economic growth. The world bank group wbg, with private and public sector partners, set an ambitious target to achieve universal financial access ufa by 2020. Doc the history of banking and other financial institutions. The benefits and costs of banking regulation are also drawing. Factors affecting adoption of electronic banking system in ethiopian banking industry ayana gemechu bultum1. G01,g2,g21,g22,g28,n2,n21,n22 abstract in the united states today, the system of financial regulation is complex and fragmented.
After this period many other banks were established. Banking in ethiopia started in 1905, with the establishment of the bank of. The history of currency and banking in ethiopia and the horn of africa from the middle ages to 1935. In the late 1970s, the concept of microfinance had evolved. Evaluation of the financial performance of banking sectors. Ethiopia started in 1905 with the establishment of abysinian bank based on a 50. This report is presented as received by idrc from project recipients. History of microfinance mainly after the 1970s, some personal attempts had been made to build microfinance institutions, like accion, grameen bank etc. Ethiopia nationalized private banks and other financial institutions in 1974, but the banking sector remains small and dominated by the government with stateowned banks. Banksand other financial institutions act an act to regulate banking and other financial institutions and for matters connected therewith. Ethiopian banking history started 2000 years ago, during axumite dynasty.
This was around 2000 bc in assyria, india and sumeria. The early history of banking in ethiopia, with its distinctive mixture of foreign and. The world bank and international finance corporation washingto0n, d. He rose up the ranks to become chairman and chief executive in the late 1980s. Financial institution archives ethiopian legal brief. The structure and performance of ethiopias financial sector 5 clearly there is evolving structural shift when deposit is observed by institutions. Development bank of ethiopia, formerly known as the agricultural and industrial development bank, operates as a specialized stateowned development financial institution in the country. These non bank financial institutions provide services that are not necessarily suited to banks, serve as competition to banks, and specialize in sectors or groups. 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. Established in 1994, awash bank is the first of private commercial banks in ethiopia, created after the countrys post1991 financial deregulation. Four other financial institutions, each one covering a specific segment of credit. First, what are the main factors explaining financial crises.
Following the agreement, the first bank called bank of abysinia was inaugurated in feb. At the very hour, when the early people learned to exchange commodities, these two concepts were born. It should also be mentioned that barclays bank had opened a branch and operated in ethiopia during. Ethiopia, a growing economy with a population of over 100 million located in the conflict. One is the closed nature of the ethiopian financial sector in which there are no foreign banks, a noncompetitive market structure, and strong capital controls in place. Chinese financial institutions conducted all major banking functions, including the acceptance of deposits, the making of loans, issuing notes, money exchange, and longdistance remittance of money by the song dynasty 9601279. Fieldwork was carried out between 11 and 23 june 2002. Addis ababa university department of accounting and finance. The history of banking and other financial institutions. Thus by 1931 bank of abyssinia was legally replaced by bank of ethiopia shortly.
The majority shareholders of the bank of ethiopia were the emperor and the political elites of the time. The bank manages more than 346 branches throughout the country. In ethiopia, women account for a disproportionate share of the unbanked, and the gap is widening. Insurance companies underwrite economic risks associated with death, illness, damage to or loss of property, and other. The structure and performance of ethiopias financial sector in the. The case for financial sector liberalization in ethiopia. Before that, several institutions had been working in many countries but the effect was too small. Ethiopia, especially ato lakew lemma, ato getahun nana, ato muluneh alemu and the staff of other departments such as banking supervision and research. There were other financial institutions operating in the country like the. The definition of a bank varies from country to country. 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. 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. We can think of the activities of a financial intermediary in.
A central bank is an independent national authority that conducts monetary policy, regulates banks, and provides financial services including economic research. Various issues and prospects in the industry are examined. The structure and performance of ethiopias financial sector. The production and export of cash crops such as coffee were advanced, and importsubstituting manufactures such as textiles and footwear were established. Regulations and procedures details written by 2m editor published on 07 february 2012 category. This article provides an overview of development of financial sector in ethiopia, including background and structure of the financial sector in ethiopia, rural financial systems in ethiopia, financial developments in ethiopia, major financial product services, suppliesdemand gaps in the financial sector, the legal and policy. So we will mainly concentrate on the post 1970 era. These nonbank financial institutions provide services that are not necessarily suited to banks, serve as competition to banks, and specialize in sectors or groups. Ancient types of money known as grainmoney and food cattlemoney were used from a time of around at least 9000 bc, as two of the earliest things that could be used for the purposes of barter. Especially after world war ii, tourism, banking, insurance, and transport began to contribute more to the.
The fourth section gives a summary of the banking policy reform measures introduced by. The birth and development of banking services in ethiopia. For anyone considering a banking career in ethiopia, this list of banks in ethiopia is a helpful guide on where to start. Factors affecting adoption of electronic banking system in. The roots of modern banking can be traced, in some ways, back to 1960, when charles sanford joined bankers trust. Pdf origins and early development of banking in ethiopia. The history of banking and other financial institutions in ethiopia. In a collection of nine succinct essays, this volume looks at the role of finance in european history from the beginning of the 19th century to the period after the second world war.
Ethiopias history since the 1970s clearly shows the validity of this statement. In addition, some contend that banking regulation may impose excessive cost burdens that hinder banks in providing services to their customers and in competing with other financial institutions. A bank is generally understood as an institution which provides fundamental banking services such as accepting deposits and providing loans. Headquartered in addis ababa, the bank aims to promote ethiopia s economic development by financing agriculture, commerce. Under haile selassie i reigned 193074, ethiopias economy enjoyed a modicum of free enterprise. A decades journey from deregulation to supervisory reregulation. The other is the dominant role of stateowned banks. As a regional institution and an integral part of the nations central bank, the federal reserve bank of kansas city places much emphasis on its role in monitoring developments within banking and promoting a stable and competitive financial system. The major formal financial institutions operating in ethiopia are banks, insurance companies and microfinance institutions.
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