Emerging finance Term paper.docx - Leadstar College of Management and Leadership Faculty of Business and Leadership Graduate Department of Business

Emerging finance Term paper.docx - Leadstar College of...

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Leadstar College of Management and Leadership Faculty of Business and Leadership Graduate Department of Business Administration Individual Assignment: - Emerging Financial Markets (50%) Prepared By: - Mulualem Endalamaw Temesgen ID No. LMBA 7032/08 5 th Term MBA student December, 2016 Bahir Dar
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Abstract This paper intends to examine the prospects and challenges of financial market in Ethiopia. More attention is given to identify the roles that financial markets can play in expediting Ethiopian economy, the environmental factors that need to be analyzed the current situation of Ethiopia in terms of each factor. An exhaustive analysis of literature has been made on the secondary data obtained from different sources. The research method employed in the study has both qualitative and quantitative features. The findings of the study are presumed to be of paramount importance in providing input information for management body of financial institutions towards establishing financial markets in Ethiopia. As a way forward the Government body of Ethiopia need to take timely actions to further investigates the environmental situation to establish financial markets, appreciate the potential opportunities and make preparations towards addressing the direct challenges.
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Chapter One Introduction 1.1 Background of the study Previous studies tell that financial market has existed in Ethiopia during the Imperial regime. Before the nationalization of private property in 1975, there had existed a rudimentary financial market in Ethiopia. Financial dealing was handled by the National Bank of Ethiopia, department of the bank allowed other financial institutions and few private financial dealers participate in financial trading. The financial Dealing Group was engaged in facilitation of transaction of finances and other services in the financial markets. The financial institutions that played an intermediary role in transferring and delivery of traded finances were in the Commercial Bank of Ethiopia and the Ethiopian Investment Corporation. They provide financial dealing services and enjoyed a significant confidence of the private investing community. The volume of shares expanded at a faster rate from Birr 152,300 in 1959 to Birr 1,159,090 in 1963. The major development seen during this period was that there had been an excess of sales to the public over purchases from the public exhibiting an increasing interest of the private saving community in the investment of shares. A short-lived stock market started informally in the late 1950s and was formally instituted in 1965. The stock market was administered by the National Bank of Ethiopia which was the known regulatory body in the Ethiopian financial sector. The Imperial government tried to improve resource mobilization through the National Bank tried by establishing a Finance-dealing group – which served as the connecting link for buyers and sellers in an auction process. The National Bank laid out the rudimentary rules and regulations for the auction market. According to Asrat (2003) the stock market was moderately successful in
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