Assessment of Operational Functions of the Ethiopian Deposit Insurance Fund
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Date
2025-09
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Addis Ababa University
Abstract
This study is done for assessment of Operational Functions of the Ethiopian Deposit Insurance Fund which was established in 2023 to strengthen financial stability and protect depositors. By
Focusing on four core functions of the fund—premium setting mechanism, fund management, fund sufficiency, and public awareness—the research employed a quantitative research
approach by collecting data via structured questionnaires from 80 banking, microfinance, and EDIF professionals in Addis Ababa and an interview was done with one of EDIF Director. The
researcher used descriptive and narrative analysis methods to analyze the data collected. The results of the descriptive analysis reveals moderate confidence in EDIF’s premium setting
mechanism with mean score: 3.24, though concerns persist about its capacity to discourage risky bank behavior. Fund management practices (mean: 3.12) are viewed carefully, with
transparency and governance independence flagged for improvement. Fund sufficiency (mean: 3.08) faces skepticism regarding adequacy for crisis response. Critically, public
awareness (mean: 3.15) is underdeveloped, with weak communication on coverage limits (mean: 2.47) undermining trust. As per the interview with one of the directors, the EDIF has involved in
its operations since its establishment, elaborated why it has employed flat rate of premium settings. Points out its strengths and weaknesses and has planned to by a pay box plus role in the
near future to protect the financial sector of the economy and take part in the developing the country’s economy. The study concludes that while EDIF aligns broadly with its mandate,
strategic enhancements in risk-based premiums, governance transparency, crisis funding strategies, and public outreach are imperative to strengthen its role in Ethiopia’s financial
sector safety. Recommendations include adopting dynamic premium models, proactive disclosure protocols, and nationwide awareness
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Keywords
Premium Setting, Fund Management, Fund Sufficiency and Public Awareness.