Challenges of International Trade in Banking Operations in Ethiopia: The Case of Bole Lemi Industrial Park
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Date
2023-09-15
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AAU
Abstract
Banks in Ethiopia face challenges in their day-to-day operations. The challenges can be
either of a market or operational nature, or regulatory or reform-related. This study
examined the challenges faced by international companies in banking operations in
Ethiopia in the case of Bole Lemi Industrial Park. The research adopted a descriptive study
design, using mean and standard deviation as a statistical tool to analyze the collected data.
Stratified random and purposive sampling were used to reach a predetermined number of
employees and to identify interviewees within the departments of the selected companies.
The survey achieved a response rate of 86% and was analyzed using Microsoft Excel. The
results show that the effectiveness of banking operations is challenged by factors such as
political influence, exchange rate volatility, ethical issues, corruption, technological
barriers and regulatory compliance. However, the challenges posed by cultural differences
were found to be minimal. On the other hand, international companies face strict NBE
regulations and lengthy approval processes. Political influence, currency fluctuations and
technological challenges were also identified as the most significant factors affecting
banking operations. The study highlights those international companies operating in the
industrial park face difficulties in banking operations due to the studied variables and the
strict regulations and lengthy approval procedures of the NBE. This is an indication that
businesses are experiencing difficulties and dissatisfaction with the banking sector.
However, by addressing these issues, Ethiopian banks can increase the scope and quality
of their services while improving operational efficiency. The study recommends that
policymakers and the NBE improve banking regulations and that banks develop their
capacity to improve banking operations. Researchers should also conduct further studies
on improving banking operations.