Investigation of Potential Benefits and Challenges of Foreign Banks Entering the Ethiopian Banking Sector

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In principle, foreign bank entry might meaningfully reduce the cost of credit by getting capital, technical skills, and product development to host country, which increases competition and leads to enhancements in the competence of the banking area, the main objective of this study is to examine how the local banking sector can be affected by the introduction of foreign banks. To achieve this, both qualitative and quantitative research approach were employed, and descriptive research design was engaged to describe the benefits and challenges related with foreign bank entry into the Ethiopian commercial banking business, the researcher used a combination of stratified and purposive sampling techniques to choose the samples for the study. The research conducted using statistical analysis such as average mean, standard deviation, frequency, and percentage on 162 survey questionnaires with the aid of SPSS statistics 23, it was found that the banking sector in Ethiopia is expressively affected by the permission of foreign banks. The local commercial banks in Ethiopia might face both good and undesirable concerns due to the entry of foreign bank. According to key findings, local banks would advantage in numerous ways if foreign banks were allowed to work in the Ethiopia. This contains improvements in many sides, such as possible benefits, efficiency, monetary and societal indicators, and possible costs. Therefore, it is recommended that entry of foreign banks in the nation could be useful for both the local banks and the country as a whole.



Foreign Banks, Domestic Banks, Macro Economic Indicators