Operational and Strategic Readiness of Ethiopian Commercial Banks for The Emerging Capital Market: A Multi-Dimensional Assessment
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Date
2025-09
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Addis Ababa University
Abstract
Globally, commercial banks play a crucial role in capital markets by offering asset management, structured finance, and leveraging digital and fintech innovations. In Africa, countries like South Africa, Nigeria, and Kenya have seen active bank participation in capital markets despite challenges such as regulatory uncertainties and market volatility. In Ethiopia, the enactment of the Ethiopian Capital Market Proclamation No. 1248/2021 marked a significant milestone in Ethiopia's financial landscape, setting the stage for a robust capital market that can drive economic growth by attracting investments and enhancing market efficiency. The readiness of commercial banks is vital for the success of the emerging capital market. This study examines the operational and strategic readiness of Ethiopian commercial banks, focusing on senior managers' perceptions, competitive strategies, capital adequacy, workforce capabilities, and leadership. A mixed-methods approach was employed, integrating qualitative insights with quantitative data for a comprehensive analysis. The findings reveal that while Ethiopian banks are optimistic about the potential of the capital market, their readiness is moderate due to gaps in strategic planning, risk management, and workforce skills. Competitive strengths such as partnerships and innovation are evident, but weaknesses in pricing strategies and digital infrastructure limit effectiveness. The study recommends targeted training programs, improved risk management frameworks, investment in technology, and leadership development initiatives to enhance banks' preparedness. By addressing these gaps, Ethiopian banks can play a pivotal role in the success of the capital market, contributing significantly to the country's economic development and financial integration
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capital market, commercial banks, regulatory framework