Assessing the Implications of Regulatory Policy on the Development of Private Commercial Banks in Ethiopia: A Case of NBE Bills Purchase Directive.
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Date
2014-05
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Addis Ababa University
Abstract
This paper assesses the implications of regulatory policy namely, NBE bills
purchase directive, on the development of private commercial banks in Ethiopia.
Mixed research approaches and descriptive research type were employed.
Accordingly, research questions were approached via research tools like
questionnaires, key informant interview and document surveying and analyzed
using simple descriptive statistics like ratio, percentage and average. The findings
of the research shows that NBE bills purchase directive have negative implications
on loanable fund, income and expense, profit, Capital and reserve, and deposit of
private commercial banks, whereas positive implications on branch expansion and
product development of private commercial banks. According to the finding, the
directive affected the loanable fund, income, profit, reserve, and deposit of
private commercial banks via reducing them. The implication of the directive
implied on expense of private banks via increasing overall expenses. Thus, the
NBE bills purchase directive has negative impact on almost all performances of
private commercial banks, which further has negative implications on the
development of private commercial banks. Finally, respondents forwarded
recommendations like lessening the percentage amount of allotment, increasing
interest rate paid for the bills and phasing out the directive
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Keywords
Purchase directive