Yitbarek, Takele (Assoc. Prof.)Mekdes, Bulti2020-07-242023-11-042020-07-242023-11-042020-01http://etd.aau.edu.et/handle/123456789/21991A Research submitted in Partial Fulfilment of the Requirements for the Award of Master of Arts Degree in Business AdministrationCapital market in Ethiopia was established at the beginning of the Imperial era, although it was disrupted by the military regime and has never since resumed. After a trifling effort to establish the capital market since the early 1990s, the current government has shown a strong interest in developing the capital market and looking forward to promoting economic growth. The study endeavours to investigate how the introduction of capital market could potentially interact with existing financial institutions that might unfold as competitive, complementary or co-evolutionary. The paper utilized market capitalization and trade volume as proxy measures for capital market performance. It also used liquidity, efficiency, profitability, capital adequacy and asset quality to measure banks performance; and profitability, operation growth, solvency, asset quality and management soundness to evaluate insurance companies’ performance. The study employed a combination of multi-criteria decision making approaches to establish level of importance of each indicator and capture influence relationship. AHP ranked liquidity, capital adequacy, asset quality, profitability and efficiency based on their level of importance in measuring banks’ performance. Projected the forthcoming capital market interplay with bank performance using DEMATEL revealed, market capitalization, efficiency and asset quality would affect-influence liquidity, trade volume and profitability of banks. Regarding insurance companies’, profitability, operating growth, solvency, asset quality and management soundness were ranked, respectively. Moreover, the affect-influence relationship between capital market and insurance companies’ performance indicated, operating growth, solvency and management soundness bi-directional relationship with profitability, asset quality, market capitalization and trade volume. Therefore, this research concluded that banks would have a competitive relationship during the advent of capital market; whereas insurance companies would have complementary interplay.enAHP, DMATEL.Capital market, BankInsuranceThesis