Introducing Regulated Stock Markets In Ethiopia Relevance To The Banking Sector Development And Role In Investors Protection

The banking sector is the dominant source of finance for businesses in Ethiopia. A keyrncharacteristic of the Ethiopian banking sector is that the stock of bank credit to the private sectorrn(including nonfinancial public enterprises) remains very low, when compared with the situationrnin other developing countries. High degree of inefficiency characterizes the banking sectorrnmaking it difficult for business to get the necessary finance or to start up or expand. The rate ofrncompany formation through initial public offer of shares and the separation between ownershiprnand control in Ethiopian share companies is growing. The emerging corporate ownershiprnstructure is also a dispersed one. The main focus of this paper is, therefore, discussing thernrelevance of introducing stock market in light of the existing banking sector development in therncountry. Most importantly, the thesis discus the role of introducing regulated stock markets inrnprotecting investors in light of the growing dispersed company ownership structure and tIwrnexisting institutional, regulatory, and ,legal framework in the primary offering market. In addition,rnthe study discusses the factors that 'are identified as preconditions and determinants for stockrnmarket development along with review and analysis of the objective reality prevailing in Ethiopiarnwith regard to these factors.

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