The history of banking and other financial institutions in ethiopia pdf

Half strategy of gradualism in reform, 20012017 working paper pdf available. The history of currency and banking in ethiopia and the horn of africa from the middle ages to 1935, ethiopia observer, n. The fourth section gives a summary of the banking policy reform measures introduced by. The major formal financial institutions operating in ethiopia are banks, insurance companies and microfinance institutions. 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. 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.

Many financial institutions play the role of a financial intermediary. Electronicbanking in ethiopia practices, opportunities and. Ethiopias history since the 1970s clearly shows the validity of this statement. The other is the dominant role of stateowned banks.

Types and roles of formal financial institutions providing agricultural credit objective. Headquartered in addis ababa, the bank aims to promote ethiopia s economic development by financing agriculture, commerce. Various issues and prospects in the industry are examined. Under haile selassie i reigned 193074, ethiopias economy enjoyed a modicum of free enterprise. 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. The structure and performance of ethiopias financial. Banks in ethiopia overview and guide to banks in ethiopia. Especially after world war ii, tourism, banking, insurance, and transport began to contribute more to the. 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.

To recommend appropriate actions to be taken to promote ebanking in ethiopia. Thus by 1931 bank of abyssinia was legally replaced by bank of ethiopia shortly. Four other financial institutions, each one covering a specific segment of credit. The history of banking and other financial institutions in ethiopia. The financial in stitutions reform, recovery, and enforcement act of 1989.

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. A commercial bank is a type of financial institution that accepts deposits, offers checking account services, makes business, personal and. A central bank is an independent national authority that conducts monetary policy, regulates banks, and provides financial services including economic research. Pdf origins and early development of banking in ethiopia. Ethiopia started in 1905 with the establishment of abysinian bank based on a 50. 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. The saving and credit cooperative are considered as semiformal financial institutions, which are not regulated and supervised by national bank of ethiopia nbe.

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 national bank of ethiopia was established in 1963 by proclamation 206 of 1963 and began operation in january 1964. Ethiopian banking history started 2000 years ago, during axumite dynasty. The definition of a bank varies from country to country. 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. The fourth section gives a summary of the banking policy reform measures introduced by the current ethiopian government. He rose up the ranks to become chairman and chief executive in the late 1980s. The roots of modern banking can be traced, in some ways, back to 1960, when charles sanford joined bankers trust. Its goals are to stabilize the nations currency, keep unemployment low, and prevent inflation.

The world bank group wbg, with private and public sector partners, set an ambitious target to achieve universal financial access ufa by 2020. Factors affecting adoption of electronic banking system in. 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 statements are therefore the starting point of bank financial appraisal. 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. This intermediation role of banks takes different forms in different economic systems. The bank revenue highly explained by price of fund than other input prices, that. The history of banking and other financial institutions in ethiopia free download as word doc. The new bank, bank of ethiopia, was a purely ethiopian institution and was the first. Origins and early development of banking in ethiopia request pdf. With more than 60 million inhabitants, it has one of the largest populations in ssa. This report is presented as received by idrc from project recipients. A bank is generally understood as an institution which provides fundamental banking services such as accepting deposits and providing loans.

Ethiopia nationalized private banks and other financial institutions in 1974, but the banking sector remains small and dominated by the government with stateowned banks. The formal financial system is a regulated sector which comprises of financial institutions such as banks, insurance companies and microfinance institutions. The majority shareholders of the bank of ethiopia were the emperor and the political elites of the time. This makes the analysis of the health and soundness of deposit takers central to any assessment of financial system stability. The benefits and costs of banking regulation are also drawing. 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. The roles of such banks are paramount in developing countries like ethiopia where the financial market is underdeveloped and none existed. So we will mainly concentrate on the post 1970 era. Public disclosure authorized access for all world bank. 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.

History of banking in ethiopia, bank of abyssinia, bank of ethiopia 1. Uvadare digital academic repository financial market. Following the agreement, the first bank called bank of abysinia was inaugurated in feb. Established in 1994, awash bank is the first of private commercial banks in ethiopia, created after the countrys post1991 financial deregulation. British even in the unlikely event of a coalition among all other board members, european. The bank of ethiopia opened branches in dire dawa, gore, dessie, debre tabor and harrar. Section three summarizes studies that relate the association between financial lending institutions and economic growth. 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. Banksand other financial institutions act an act to regulate banking and other financial institutions and for matters connected therewith. In the late 1970s, the concept of microfinance had evolved. Origins and early development of banking in ethiopia.

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 case for financial sector liberalization in ethiopia. At the very hour, when the early people learned to exchange commodities, these two concepts were born. Weve got lists of the most important financial services companies, banks, institutions, accounting firms, and. Financial institution archives ethiopian legal brief. 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. A brief history of regulations regarding financial markets in.

Pdf the short life of the bank of ethiopia researchgate. To learn more, see our list of financial institutions companies lists of the main players in corporate finance. 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. 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. Insurance companies underwrite economic risks associated with death, illness, damage to or loss of property, and other. G01,g2,g21,g22,g28,n2,n21,n22 abstract in the united states today, the system of financial regulation is complex and fragmented. See the relevant country pages for more information. The national bank of ethiopia nbe is the central bank of ethiopia. The chapters have discussed the history, current state, structure, policy and. Unlike in other african countries, the distinguishing imprint of a single colonial.

The history of banking and other financial institutions in. We identify two factors that may constrain ethiopias financial development. First, what are the main factors explaining financial crises. The history of banking and other financial institutions i n ethiopia the. 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. The history of banking and other financial institutions. The early history of banking in ethiopia, with its distinctive mixture of foreign and government financial institutions, is briefly described in section 2. Before that, several institutions had been working in many countries but the effect was too small. The financial sector in ethiopia consists of formal, semiformal and informal institutions. Nonbank financial institutions assets to gdp for ethiopia. 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.

The informal and semiformal financial sectors in ethiopia. The paper examines the evolution up to the beginning of the 70s of the ethiopian banking system. This was around 2000 bc in assyria, india and sumeria. A decades journey from deregulation to supervisory reregulation. 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. 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. The sector is the backbone of economy in the country jain and jaiswal, 2016. Ma gillivray, representative of the british owned national bank of egypt marked the introduction of modern banking in ethiopia. The production and export of cash crops such as coffee were advanced, and importsubstituting manufactures such as textiles and footwear were established.

National bank of egypt havingbeen entrusted of the project, the new institution was. Access to finance in ethiopia microfinance gateway. After this period many other banks were established. Regulations and procedures details written by 2m editor published on 07 february 2012 category. There were other financial institutions operating in the country like the. History of finance globalization is circulating the western form of finance in the whole universe. Ethiopia the agreement that was reached in 1905 between emperor minilik ii and mr.

Later, in ancient greece and during the roman empire, lenders based in temples gave loans, while accepting deposits and performing the change of money. In ethiopian context, one cannot confidently argue that. 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 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. Evaluation of the financial performance of banking sectors. A brief history of regulations regarding financial markets in the united states. 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.

The history of banking and other financial institutions in ethiopia the agreement that was reached in 1905 between emperor minilik ii and mr. Explanations, types, and implications prepared by stijn claessens and m. Banking in ethiopia started in 1905, with the establishment of the bank of. Insurance companies underwrite economic risks associated with death, illness, damage to or loss of property, and other risk of loss. Doc the history of banking and other financial institutions. The bank was authorized to combine the functions of central banking issuing currency notes and coins and commercial banking. Library of congress federal research division country profile.

The history of banking is intertwined with the history of money. It contrasts with regional and international peer countries where banking industries have a much higher share of private sector and foreign participation. Ethiopia s formal financial sector is still underdeveloped and far from being liberalised. 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. Ethiopia, a growing economy with a population of over 100 million located in the conflict.

For anyone considering a banking career in ethiopia, this list of banks in ethiopia is a helpful guide on where to start. 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. The bank is active in promoting financial inclusion policy and is a member of the alliance for financial inclusion afi. 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. Ethiopia is one of the poorest and most underdeveloped countries of the world. 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 chapter begins with an overview of the countrys economic status and describes the major social and macroeconomic performance for the study period 2004. We identify two factors that may constrain ethiopia s financial development. All epayment methods share a number of common characteristics. Ethiopia, the construction and business bank, and the development bank of ethiopia. This paper discusses the role that has been played by the banking system especially after the arrival of private investors in the sector. Addis ababa university department of accounting and finance. In 1024, the first paper currency was issued by the state in sichuan. Ethiopia, especially ato lakew lemma, ato getahun nana, ato muluneh alemu and the staff of other departments such as banking supervision and research. Factors affecting adoption of electronic banking system in ethiopian banking industry ayana gemechu bultum1. Fieldwork was carried out between 11 and 23 june 2002.

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. The ethiopian banking system by arnaldo mauri ssrn. We can think of the activities of a financial intermediary in. The case of the association of ethiopian microfinance.

The world bank public disclosure authorized 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. These nonbank financial institutions provide services that are not necessarily suited to banks, serve as competition to banks, and specialize in sectors or groups. The structure and performance of ethiopias financial sector 5 clearly there is evolving structural shift when deposit is observed by institutions. Its headquarters are in the capital city of addis ababa. The history of currency and banking in ethiopia and the horn of africa from the middle ages to 1935. 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. The world bank and international finance corporation washingto0n, d. In fact, the history of banking in ethiopia dates back to the turn of the century. The history of banking and other financial institutions inethiopia. The structure and performance of ethiopias financial sector. One of the main objectives of financial institutions such as banks is mobilizing resources in particular, domestic savings and channelling these to wouldbe investors.

That is, they help connect borrowers and lenders of funds. Currently there are 17 commercial banks in ethiopia, one state owned and 16 private. In ethiopia, women account for a disproportionate share of the unbanked, and the gap is widening. Development bank of ethiopia, formerly known as the agricultural and industrial development bank, operates as a specialized stateowned development financial institution in the country. Fis 0112012 by abrham yohannes on march 9, 20 8 comments licensing and supervion of the business of financial instituions download.

Financial analysis of banking institutions 3 framework normally used in this process is a set of financial accounts. 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. It should also be mentioned that barclays bank had opened a branch and operated in ethiopia during. The development bank of ethiopia dbe is a specialized bank in project financing and is not a deposit taking. The structure and performance of ethiopias financial sector in the. 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. 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. As in other countries, ethiopia shows that the legislation is a strong motor for mfa creation. Regulation of mobile and agent banking services national bank of ethiopia directives no. The early history of banking in ethiopia, with its distinctive mixture of foreign and. History of microfinance mainly after the 1970s, some personal attempts had been made to build microfinance institutions, like accion, grameen bank etc.

Prior to this proclamation, the bank used to carry out dual activities, i. Liberalisation of the banking industry in tanzania. The case of ethiopia ethiopia has conducted financial sector reform following the change in government and economic policy in 1991. History of financial institutions contributes to the analysis of how the modern corporation, business and finance have shaped and keep on shaping our world. Strong and integrative leadership is one of the keys for keeping mfas together. Section 4 focuses on entering of other financial institutions into the ethiopian. These were banco di roma, banco di napoli and banca nazionale del lavora. 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.