The Impact of Ethiopian Banks’ Investment Strategies on Stock Market Liquidity: An Analysis of Institutional Behavior & Market Dynamics.

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dc.contributor.advisorHawlet Ahmed (PhD
dc.contributor.authorElias Tenkolu
dc.date.accessioned2026-03-03T05:12:28Z
dc.date.available2026-03-03T05:12:28Z
dc.date.issued2025-04
dc.description.abstractThis study investigates the impact of Ethiopian banking investment strategies on stock market liquidity, with a focus on institutional behavior and evolving market dynamics. Given Ethiopia’s current efforts to establish a formal stock exchange, the role of banks—as key institutional investors—is particularly relevant to understanding market liquidity. Grounded in Market Microstructure Theory, Liquidity Preference Theory, and Behavioral Finance, the research explores how factors such as the regulatory environment, macroeconomic context, market infrastructure, and risk appetite influence banking investment behavior. The research employs a quantitative design, using secondary data collected from annual reports and regulatory filings submitted to the National Bank of Ethiopia (NBE). The sample includes seven major private commercial banks (e.g., Dashen, Awash, Abyssinia), selected using random sampling to ensure representativeness and minimize bias. Key financial indicators used in the analysis are Return on Assets (ROA), Debt-to-Equity Ratio (D/E), and Free Cash Flow (FCF) as independent variables, with Dividend Payout Ratio (DPR) representing stock market liquidity as the dependent variable. Descriptive statistics and regression analysis were employed as the main tools of analysis. The findings reveal significant variation in banks’ investment and dividend behaviors, influenced by risk tolerance, regulatory pressures, and profitability levels. These results validate the hypothesis that strategic financial decisions by Ethiopian banks have a significant effect on stock market liquidity. This study contributes to the limited empirical literature on emerging markets and provides actionable insights for investors, regulators, and policymakers aiming to foster a more liquid, transparent, and efficient stock market in Ethiopia.
dc.identifier.urihttps://etd.aau.edu.et/handle/123456789/7774
dc.language.isoen_US
dc.publisherAddis Ababa University
dc.subjectBanking Investment Strategies
dc.subjectStock Market Liquidity
dc.subjectInstitutional Investors
dc.subjectEthiopia
dc.subjectMarket Microstructure Theory
dc.subjectLiquidity Preference Theory
dc.subjectBehavioral Finance
dc.subjectFinancial Performance Indicators
dc.subjectDividend Payout Ratio
dc.subjectEmerging Markets
dc.titleThe Impact of Ethiopian Banks’ Investment Strategies on Stock Market Liquidity: An Analysis of Institutional Behavior & Market Dynamics.
dc.typeThesis

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