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Banking Sector Reform In Ethiopia, Admassu Bezabeh, Asayehgn Desta

Collected Faculty and Staff Scholarship

The fragile and inefficient state-dominated banking sector that existed in Ethiopia during the military government (1974-1991) was a major hindrance to economic growth. Since it took power in 1991, the current government has implemented a number of reforms. For instance, in 1994, the government legalized domestic private investment in the banking industry. In addition, it restructured the two development banks as commercial banks, and introduced a new Banking and Monetary Proclamation that gave more autonomy and further clarified the National Bank of Ethiopia’s activities as the regulator and supervisor of the banking sector. Although these measures have led to marginal …