The Ethiopian Banking System

Abstract:     
Ethiopia may be listed among the longest surviving states in the whole world and has been able to preserve more than any other country in the African continent its own national identity. It is not a surprise, therefore, if one can hardly note, unlike in other African countries, the distinguishing imprint of a single colonial power. This is true even in the financial sphere, where, given the backward initial conditions, it was necessary to have large recourse to foreign assistance and co-operation in setting up banking institutions. The paper examines the evolution up to the beginning of the 70s of the Ethiopian banking system. Particular attention is given to the new structure set up with the reorganization of the financial sector occurred in 1964. By virtue of a very important banking law, the existing State Bank of Ethiopia ceased operations and was replaced by two new institutions, the National Bank of Ethiopia and the Commercial Bank of Ethiopia, both state owned, and its assets and liabilities were taken over by them. The first institution had to play the role of a central bank in this two-tier shaped banking system, while the second had to compete in carrying out commercial banking business with three private institutions: the Addis Ababa Commercial Bank and two affiliated companies of foreign banks, Banco di Napoli (Ethiopia) and Banco di Roma (Ethiopia). Four other financial institutions, each one covering a specific segment of credit market out of commercial banking, were completing the financial intermediation picture: the Development Bank of Ethiopia, the Ethiopian Investment Corporation, the Imperial Savings and Home Ownership Association and the Savings and Mortgage Corporation of Ethiopia

Number of Pages in PDF File: 10

Keywords: Ethiopia, African Banking, financial institutions

JEL Classification: O16, N22

Accepted Paper Series