Possibility of Syndicate Lending in Ethiopia Banking Industry. (Case of selected eight banks).
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Date
2011-06
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Addis Ababa University
Abstract
There is a considerable expansion of the volume of syndicated loans in emerging
markets in the recent years. While until recently large majority of loan
transactions in Ethiopia historically have been bilateral transactions that are
provided by single banks.
This thesis empirically investigates factors that influence the possibility of
syndicate lending in Ethiopia banking industry using the financial information of
8 banks for the period of 2005-2010.
The study investigate significant role of loan characteristics and of lending limit,
liquidity, capital adequacy and concentration on the possibility of syndicate
lending on Ethiopia banking industry.
The result of the study indicates that lending limit and liquidity positively
influences the possibility of syndicate lending in Ethiopia banking industry while
capital adequacy and concentration negatively influences. This shows Banks
does not join loan syndications when their capital levels are sufficient enough to
support the extra risk taken.
The results of the study also support the efforts of authorities to increase banking
competition and efficiency, and to implement binding banking regulation on
capital requirement to promote the possibility of syndicated loan
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Keywords
Syndicate lending, Ethiopia banking, Industry