Regulation and Supervision of Nationl Bank of Ethiopia and its Impact on the Activities of Ethiopian Private Banking Industry
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Date
2012-04
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A.A.U
Abstract
This study is aimed at assessing the impact of regulatory and supervisory functions of
NBE on the activities of Ethiopian private banking industry. The research examined the
role played by the regulatory authorities towards a healthy supervision of the operation
of banks in Ethiopia and also examined the tools, scope, methods and policy framework
of supervision. The study theme was guided by six specific objectives and three research
questions. The research borrowed heavily from related research material which was
appropriately referenced. It adopted a questionnaire based method of evaluation for the
purposively selected private banks namely (.4wash, Dashen, Abyssinia, Wegagen, United,
Nib International Bank) and for banking supervision department employees of NBE and
interview with the banking supervision department employees of NBE were conducted to
meet the specific objective and to answer the research questions and comparing the
survey result using descriptive statistics and analysis both results i. e. survey and
interview with concurrent mixed method research approach. The results of this combined
research methodology reveal that the supervisory and regulatory framework of NBE is
effective. But the success of supervisory and regulatory framework of NBE endangered
by NBE supervisory capacity particularly related to little experience of the banking
supervision department employees and the absence of entry training for the new
employees to notify about the banking operation. The effective regulation and supervision
activities of NBE, results banking stability in Ethiopia. The stability of banking industry
in Ethiopia measured by using three parameters namely profitability, liquidity and asset
quality of the banks. Based on this their profitability, liquidity and asset quality of most of
private banks in Ethiopia is currently increase time to time. As a result, banking industry
in Ethiopia assure public confidence to deposit and withdraw their money at any time.
Generally NBE followed preventive regulation method and on-site and off-site
supervision method for banks and it has great impact on the activities of banking
industry.
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Keywords
Banking Industry, Nationl Bank