POTENTIAL EFFECTS OF FORIGN BANK ENTRY ON FINANCIAL INDUSTRY OF ETHIOPIA

Abstract

The financial industry of Ethiopia has a long story of existence, both in foreign, private and government ownership and participation. Currently the industry is once again being exposed to foreign investors. This paper studies the potential effects based on the prospect of bank professionals. Quantitative research design and descriptive models are used on this paper. the researcher uses secondary data from balance sheets of the local banks and primary data sources from local bank senior employees and foreign bank representative offices. the study identifies the effects on the finance sector to be rather positive regarding technological advancement, low cost of credit and assurance of excelled service and points out risk of capital outflow and weak financial security of the domestic finance system to be potential risks to be faced accordingly. The study also forwards recommendations to the NBE and local banks the mechanism to overcome the negative effects based on the experience of other nation, and to use the positive opportunities relentlessly