Development Economics

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Browsing Development Economics by Author "Denu, Berhanu (PhD)"

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    Assessment Of Factors Affects The Savings Of Micro And Small Enterprises In Addis Ababa: The Case Of Kirkos Sub City Trade Micro-Enterprinuers
    (Addis Ababa University, 2021-06) Tolesa, Idosa; Denu, Berhanu (PhD)
    The study determined assessed thefactors that affects the saving of micro enterprises in Addis Ababa: the case of Kirkos sub city trade micro-enterprinuers. A multistage cluster sampling technique was used to select 341 respondents for the study and questionnaire was used to elicit information from the respondents. Descriptive statistics and probit regression were used to analyze the data. From total sample of 341 micro and small enterprises 51.9 %( 177) of them are 31-35 age this is indication of a relatively they are youths .The result of probit regression shows a negative relationship between the income of respondents and their participation in financial institutions. This because, in these case respondents are merchants (business men) they prefer to work with the money rather than saving at financial institutions. The main financial constraints that affect performance of MSEs to participate in formal financial institutions were high interest rate on loanand high collateral requirement asked by financial institutions. The study recommends that,in order to facilitate access to credit for MSEs, (financial institutions) banks and MFIs make adjustments in interest rate, affordable collateral values as well as need to allocate a certain portion of their loanable funds for MSE entrepreneurs and expand their branches around to increase their accessibility.
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    The Contribution of Commercial Banks to Economic Growth of Ethiopia
    (Addis Ababa University, 2021-01) Geletu, Hailemariam; Denu, Berhanu (PhD)
    No country can ever have a healthy economy without a sound and effective banking system. In the system of modern economy, banks play a very sound role in economic development of country. They collect the surplus savings of the large group of population and make them available for those economic agents who have best investment opportunity. They also create new demand deposits in the process of granting loans and purchasing investment securities. They stimulate a country‟s economy through facilitation of economic activities. This research paper has made its focus to the empirical study of the contribution of commercial banks to the economic growth of Ethiopia by taking financial sector development indicator variables deposit, loan, asset and profit as an explanatory variables and RGDP as a dependent variable. The study empirically analyses the contribution of commercial banks to Economic Growth in Ethiopia using time series data over the period 2001-2020.After the data‟s are confirmed for normality, causality, serial correlation and collinearity tests a five variable time series Ordinary Least Squares regression analysis is employed to estimate the parameters. The result of this study, therefore, provides that there is positive and significant relation between the independent variables asset, deposit and loan with RGDP and a negative but significant association between profit and RGDP. And this could have a sound and comprehensive benefit to the study country.
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    Determinants of Growth Potential and Constraints of Micro and Small Enterprises in Lideta Sub City of Addis Ababa City Administration, Ethiopia
    (Addis Ababa University, 2021-02) Soboka, Diro; Denu, Berhanu (PhD)
    The general objective of this study was to assess the growth potential and identify the constraints of MSEs operating in Lideta Sub City of Addis Ababa City Administration. The study was adopted descriptive and explanatory research design with qualitative and quantitative approaches of cross sectional data collected from primary and secondary sources through a structured questionnaire, observations and interviews. The sample size was determined by using slovin’s formula and contained 162 samples of MSEs that are grouped into sectors of manufacturing, construction, service, trade and urban agriculture. These samples were selected from each sector using proportional stratified random sampling method. The data were analyzed with linear regression analysis of Ordinary Least Square technique and summary statistics. The findings revealed that current capital, gender and education are found to be significant factors that affect MSE growth positively and statistically significant. The findings also showed that initial capital and experience are statistically significant and negatively associated with the growth of enterprises by employment. However, source of finance, family size and age are found to be statistically insignificant variables in this study. Policy makers and other stakeholders should reconsider financing strategy for MSEs and firms of MSEs with lower capital should take actions towards better improvement of their growth potential. The government actors and other stakeholders should give due attention to gender difference appearing in the participation of MSE operation. The potential limitations of this study were time and financial constraints. Finally, future panel surveys and availability of other data may call for further studies in order to have inclusive solution for the constraints of MSE growth.
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    Factors that Contribute to the Failure of Micro and Small Enterprise in Addis Ababa City, Ethiopia
    (Addis Ababa University, 2021-01) Jabessa, Bayissa; Denu, Berhanu (PhD)
    Micro and small enterprises (MSEs) development are among the focus areas where efforts are being made in Ethiopia to reduce poverty and foster economic growth and development. The main purpose of this study was to investigate factors that threaten the existence of MSEs and leads to the failure of MSEs in Addis Ababa. The study has selected 130 enterprises using stratified probability sampling from the sample frame of operating and closed MSEs, and conducted an interview via phone. A binary logistic regression model; that uses Stata statistical software was employed. Necessary tests such as model specification, model fitness, and multicollinearity tests were conducted and the assumed binary logistic regression confirmed to suit the model. The result was interpreted using the odds ratio and marginal effect. Accordingly, factors such as lack of self-motivation to start own business, lack of own work premises, lack of access to the market development, firm size micro-enterprise, and gender of a business owner being female were found significant and have positive relationship MSEs failure. Whereas factors prior work experience and lack of access to the use of technology have a negative relationship with MSEs failure. Therefore Addis Ababa job creation and enterprise development sector office and other concerned development agencies need to note factors identified for MSEs failure and use them as an input while planning and mentoring MSEs operators to reduce the effect of factors that contribute to MSEs failure and make a better business environment for business owners and sector can effectively contribute to the country’s economic development. So as to reduce the constraints/challenges that lead to the MSE's failure, suggestions based on findings and research directions were forwarded.
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    Macroeconomic, Sector-Specific and Institutional Determinants of Banking Sector Development in Ethiopia
    (Addis Ababa University, 2021-01) Admasu, Mulugeta; Denu, Berhanu (PhD)
    This paper aims at investigating the macroeconomic, sector-specific and institutional determinants of banking sector development in Ethiopia using fixed effect model. Using yearly quantitative panel data from 2014 to 2018, the study found real GDP growth rate has insignificant effects on both banks private sector credit to GDP and banking stability. The regression result shows that inflation has a positive significant effect on private sector credit, and negative relationship with the banking soundness. Further, trade openness, reserve requirement and rule of law index have found significant but negative effect on private sector credit, and significant and positive influence on banking soundness. It is therefore recommended that government of Ethiopia ensures maintain low inflationary and high economic growth in order to stimulate financial development. Moreover, national bank of Ethiopia should consider adjusting the cash reserve ratio of banks downwards.
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    The Role of Foreign Aid for Economic Development of Ethiopia
    (Addis Ababa University, 2021-06) Hiruy, Yoseph; Denu, Berhanu (PhD)
    The research has tried to investigate imperially, the contribution of official development assistance in filling the resource gaps of Ethiopia. For this purpose, quantitative data has been gathered, organized and analyzed from the year 1990 to 2019 G.C. Co-integration test and Error Correction Model was applied in order to investigate the long run and short-run relationship between dependent and the independent variables. Accordingly, the research investigate the reality of Ethiopia having: the saving investment gap for the year 2005 – 2020 at average was 14.56 % percentage of GDP, the trade gap for the year 2005 – 2020 in average was 17.06 % percentage of GDP and average fiscal gap (budget deficit) from year 1993 to 2018 including the grant received was 12.10 Billion Birr. The empirical results from econometrics model reveal that foreign aid has positive impact on economic growth in both long run and short run and statistically significant at 1 percent significant level. The positive and significant error correction term shows that the extent to which ODA deviate from the long run steady state path after a certain shock, which, is 0.329 percent each year. The important policy implication of the study proposes that more effort has to be made to improve the negative impact of interest payment on external debt, mainly because of existence of poor institutional arrangement, which accumulate unpaid sums that shall create burden to the future repayment schedule and doubt on potential donors. the fund to unproductive sectors. The government has to ensure, a close monitoring and consistent management strategies, which is used to avoid mismanagement problems specially, for timely repayment strategy. Finally, the research paper tried to realize that the absorption capacity using assessment on rate of increase in saving and investment through the last thirty years, and the mere existence of the resource gap in every years and time-to-time increase of the management capacity of institutions.