Introducing Regulated Stock Markets In Ethiopia: Relevance to the Banking Sector Development And Role in Investors' Protection

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Addis Ababa University


The banking sector is the dominant source of finance for businesses in Ethiopia. A key characteristic of the Ethiopian banking sector is that the stock of bank credit to the private sector (including nonfinancial public enterprises) remains very low, when compared with the situation in other developing countries. High degree of inefficiency characterizes the banking sector making it difficult for business to get the necessary finance or to start up or expand. The rate of company formation through initial public offer of shares and the separation between ownership and control in Ethiopian share companies is growing. The emerging corporate ownership structure is also a dispersed one. The main focus of this paper is, therefore, discussing the relevance of introducing stock market in light of the existing banking sector development in the country. Most importantly, the thesis discus the role of introducing regulated stock markets in protecting investors in light of the growing dispersed company ownership structure and tIw existing institutional, regulatory, and ,legal framework in the primary offering market. In addition, the study discusses the factors that 'are identified as preconditions and determinants for stock market development along with review and analysis of the objective reality prevailing in Ethiopia with regard to these factors.



Introducing Regulated Stock Markets In Ethiopia