Implication of NBE Directive of Bill Purchase on Performance of Private Commercial Banks in Ethiopia
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Date
2012-06
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A.A.U
Abstract
The aim of the study is to assess the implication of the NEE 's directive of bill
purchase on the performance of the private commercial banks. The paper, based on an in-depth interview with official of different banks investigates the premises of the directive or grounds on which the government intervened in the financial sector, the manner in which the directive affects the performance of the banks, related issues with regard to this intervention and measures that are taken by the banks. The results indicate that the directive was issued as a means of increasing the private banks participation in priority sector financing and also to control the inflationary problem. Secondly the directive created two major challenges: liquidity and asset liability mismatch which affect the performance and profitability of the banks in an adverse manner. The banks as such are taking strategic measures, which according to the officials has both positive and negative implications to the sector.
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Keywords
Commercial Banks, NBE Directive