Implication Of Nbe Directive Of Bill Purchase On Performance Of Private Commercial Banks In Ethiopia

The aim of the study is to assess the implication of the NEE 's directive of billrnpurchase on the performance of the private commercial banks. The paper, based onrnan in-depth interview with official of different banks investigates the premises of therndirective or grounds on which the government intervened in the financial sector, thernmanner in which the directive affects the performance of the banks, related issuesrnwith regard to this intervention and measures that are taken by the banks. Thernresults indicate that the directive was issued as a means of increasing the privaternbanks participation in priority sector financing and also to control the inflationaryrnproblem. Secondly the directive created two major challenges: liquidity and assetrnliability mismatch which affect the performance and profitability of the banks in anrnadverse manner. The banks as such are taking strategic measures, which accordingrnto the officials has both positive and negative implications to the sector.

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