The main purpose of the research paper is to examine whether or not the regulation ofrnrelated party transaction in the financial sector in general has got due attention andrnwhether the regulation of related party transactions in the Ethiopian financial sector wasrnadequate or not in particular. In this regard, it can be said that though we may get manyrnresearches and literatures dealing with corporate governance issues, there are relatively arnfew researches and literatures which deal with the regulation of related party transactions.rnEven, the available materials provide with the related party transactions in the nonfinancialrnsector in general. However, the regulation of related party transactions in thernfinancial sector is different from non-financial sector. Even if related party transactionrnhas a great effect on a company, financial sector and the economy of a given country, thernattention given to it was relatively little. Companies and countries began to regulaternrelated party transactions after the occurrences of several financial company collapsesrnthought to be mainly affected by abusive related party transactions.rnBesides, the discussion in the regulation of related party transactions in the Ethiopianrnfinancial sector comes to the conclusion that its regulation is not given proper attentionrnand is not adequate in general. For example, the important legal regulation instruments inrnthe regulation of related party transactions in the financial sector such as the requirementsrnof disclosure and approval of related party transactions are not available in Ethiopia.rnBesides, the concepts of materiality and immateriality of related party transactions andrntheir distinction is not provided in the existing Ethiopian laws. Even if an attempt is madernto define related parties from the context of commercial banks, there is no definition forrnrelated party transactions. In addition, the available relevant law in Ethiopia is simplyrnconcerned with the limitation of loans of commercial banks to their related parties.rnHence, other types of related party transactions are not regulated well in the existingrnEthiopian laws. On the other hand, the remedies and sanctions in case of violations ofrnregulations of and abusive related party transactions are not provided in Ethiopia.rnParticularly, the application of class action and/or derivative suits to the claims of abusivernrelated party transactions in the Ethiopian financial sector is not provided clearly.Finally, it should be remembered that great efforts were exerted to indicate the concerns,rngaps and problems in relation to the regulation of related party transactions in thernfinancial sector in general and in the financial sector in Ethiopia in particular and finallyrncome up with some possible solutions.rnKey words: related party, related party transactions, abusive related party transactions,rnarms length basis, disclosure and approval