In theory, foreign bank entry could significantly reduce the cost of credit by bringing capital,rntechnical skills, and product innovation to host countries, which increases competition and leadsrnto improvements in the efficiency of the banking sector, ultimately benefitting customers of thernbanking system, including small and new enterprises. The main objective of this study is tornevaluate the potential impact of foreign bank entry in Ethiopian banking sector and analyses howrnfar the domestic banking sectors are ready to compete with the new technology and modernrnmanagement system. The quantitative research method was adopted to collect data based on thernpre-design survey questionnaires and the result of 134 survey questionnaires were distributedrnand the analysis done using descriptive statistics like graphical presentation, average, standardrndeviation, frequency, percentage etc. A cross-sectional design was employed for a data collectedrnand analyzed more than one case at a single time. Only quantitative research approach was alsornimplemented. Out of the total respondents, the indicate samples were selected under thernconsideration of both purposive and random sampling techniques. The key findings revealed thatrnif foreign banks were entered in the country, the domestic banks would be benefited in all thernfour dimensions such as potential benefit, potential efficiency, macro-economic and socialrnindicators and potential costs. Therefore, the permeation of foreign bank would improve therndomestic banks economic potential, additionally different macroeconomic and social indicatorsrnshow thatrnthe country would be benefited if the foreign bank were permitted. Finally therngovernment should adopt from neighboring country like Kenya and Egypt , those have a longrnperiod of experience in supervising foreign bank andrnrevise the investment proclamationrnthat prohibited Foreign bank entry.rnKey words: Foreign Bank, Entry, Macro-economic indicators, Domestic Bank