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