The Re-Establishment of the Ethiopia's Monetary and Banking Systems

Università degli Studi di Milano Working Paper No. 2008-11

34 Pages Posted: 20 May 2008

See all articles by Arnaldo Mauri

Arnaldo Mauri

Università Degli Studi di Milano

Date Written: May 2008

Abstract

The study is concerned with a crucial period of the banking history of Ethiopia, almost untouched so far by the specializing literature, in which the banking industry was affected by important changes. The paper describes and analyses the reconstruction process of the banking system and the reorganization of the monetary setting in Ethiopia started in 1941, when the Italian colonial rule came to an end and the country regained independence, during World War II. The terminal date of the study is the beginning of 1964, when a one-tier banking system, based on a state-owned financial institution, the State Bank of Ethiopia, gave way to a two-tiers banking system. The monetary banking reform in Ethiopia after liberation in 1941 was an event logical, inevitable and predictable. Different paths, however could had be followed at that moment. The choice in money matter was to establish a national monetary unit, the Ethiopian dollar, instead of keeping the country inside the East African shilling area. On the other hand, as far as concerns banking, it was opted for establishing a state-owned financial institution enjoying a monopolistic position in the credit market rather than for setting up a system of private banks, possibly expatriate.

Keywords: Ethiopia, African Banking, Banking History, Monetary Reform

JEL Classification: E42, G21, N27

Suggested Citation

Mauri, Arnaldo, The Re-Establishment of the Ethiopia's Monetary and Banking Systems (May 2008). Available at SSRN: https://ssrn.com/abstract=1135302 or http://dx.doi.org/10.2139/ssrn.1135302

Arnaldo Mauri (Contact Author)

Università Degli Studi di Milano ( email )

Milan, 20122
Italy

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