DO PRIVATE BANKS AFFECT ETHIOPIA'S ECONOMIC GROWTH?
Downloads
Introduction: Major activities of private sector banks promote changes in a country's economic progress. Many studies have concentrated on the general policy of customer service. As a result, the goal of the study is to look into the impact of private banks on Ethiopia's Gross Domestic Product (GDP) growth.
Methods: Time-series data of the National Bank from 2011 to 2020 is studied using a dynamic-factor model that is flexible for multi-variable autoregressive data.
Results: The result indicates that mobilization of deposits and domestic investment have a strong positive impact on Gross Domestic Product (GDP), whereas foreign exchange and credit services have a significant negative impact.
Conclusion and suggestion: Private banks play an important role in Ethiopia's GDP growth. Therefore, in order to boost economic growth, banks should collect deposits from all over Ethiopia and use them to fund viable investment initiatives.
Abdelhafidh, S. (2013). Potential financing sources of investment and economic growth in North African countries: A causality analysis. Journal of Policy Modeling, 35(1), 150–169. https://doi.org/10.1016/j.jpolmod.2012.01.001
Abu-Bader, S., & Abu-Qarn, A. S. (2008). Financial development and economic growth: Empirical evidence from six MENA countries. Review of Development Economics, 12(4), 803–817. https://doi.org/10.1111/j.1467-9361.2008.00427.x
Abusharbeh, M. T. (2017). The impact of banking sector development on economic growth: Empirical analysis from Palestinian economy. Journal of Emerging Issues in Economics. Finance and Banking, 6(2), 2306–2316.
Al-Awad, M., & Harb, N. (2005). Financial development and economic growth in the Middle East. Applied Financial Economics, 15(15), 1041–1051. https://doi.org/10.1080/09603100500120639.
Alex, E. (2012). The Role of Banks in Capital Formation and Economic Growth: The Case of Nigerian Economy Trans disciplinarily. Cognition, 15, 103–111.
Aurangzeb, (2012). Contributions of Banking Sector in Economic Growth: A Case of Pakistan Economics and Finance Review Vol. 2(6) pp. 45 – 54.
Bagehot, W. (1873). Lombard Street: A description of the money market. Scribner, Armstrong & Company.
Befikadu A., (2015). "The role of private Banks in financing government priority sector projects: The Case of Bank of Abyssinia”.
Beck, T., Demirgüç-Kunt, A., & Levine, R. (2000). A new database on financial development and structure. The World Bank
Bezabeh, A., & Desta, A., (2014). "Banking Sector Reform in Ethiopia. International Journal of Business and Commerce”, 3 (2225-2436), 25-38.
Bolbol, A. A., Fatheldin, A., & Omran, M. M. (2005). Financial development, structure, and economic growth: The case of Egypt, 1974–2002. Research in International Business and Finance, 19(1), 171–194. https://doi.org/10.1016/j.ribaf.2004.10.008
Bong, A., & Premaratne, G. (2019). "The Impact of Financial Integration on Economic Growth in Southeast Asia”. Journal of Asian Finance, Economics and Business, 6(1), 107–119. http://doi.org/10.13106/jafeb.2019.vol6.no1.107
Boulila, G., & Trabelsi, M. (2004). The causality issue in the finance and growth nexus: Empirical evidence from Middle East and North African countries. Review of Middle East Economics and Finance, 2(2), 123–138. https://doi.org/10.1080/1475368042000262820
Camba, A. C., & Camba, A. L. (2020). "The Dynamic Relationship of Domestic Credit and Stock Market Liquidity on the Economic Growth of the Philippines”. Journal of Asian Finance, Economics and Business, 7(1), 37–46. https://doi.org/10.13106/ jafeb.2020.vol7.no1.37
Christopoulos, D. K., & Tsionas, E. G. (2004). Financial development and economic growth: Evidence from panel unit root and cointegration tests. Journal of Development Economics, 73(1), 55–74. https://doi.org/10.1016/j.jdeveco.2003.03.002
Demetriades, P. O., & Hussein, K. A. (1996). Does financial development cause economic growth? Time-series evidence from 16 countries. Journal of Development Economics, 51(2), 387–411. https://doi.org/10.1016/S0304-3878(96)00421-X
Ghali, K. H. (1999). Financial development and economic growth: The Tunisian experience. Review of Development Economics, 3(3), 310–322. https://doi.org/10.1111/1467-9361.00070
Hicks, J. (1969). A theory of economic history (Vol. 9). Oxford: Oxford University Press
Keatinge, T. 2014. "The Role of Public and Private Sector Banking in Ethiopia's Future Economic Growth”. Retrieved from http://www.globalcenter.org
Kar, M., & Pentecost, E. J. (2000). "Financial development and economic growth in Turkey: further evidence on the causality issue (Economic Research Paper No. 00/21). Centre for International, Financial and Economics Research, Department of Economics, Loughborough University, Loughborough, UK, December 2020”.
Levine, R. (2005). "Finance and growth: theory and evidence. Handbook of Economic Growth”, 1, 865–934.
Melkamu D., 2015. "The Relation between Commercial Bank's Development and Growth in Ethiopia”.
Miller, M. H. (1998). Financial markets and economic growth. The Bank of America Journal of Applied Corporate Finance, 11(3), 8–15. https://doi.org/10.1111/j.1745-6622.1998.tb00498.x
Monetary and Banking proclamation No.83/1994 and the Licensing and Supervision of Banking Business No.84/1994. NBE Directive no: MFA/NBEBILLS/001/2011.
of Development Economics”, 74(2), 429–447.
Robinson, J. (1952). "The Generalization of the General Theory, in: The Rate of Interest and Other Essays. London: MacMillan”.
Rousseau, P. L., & Wachtel, P. (2000). Equity markets and growth: Cross-country evidence on timing and outcomes, 1980–1995. Journal of Banking & Finance, 24(12), 1933–1957. https://doi.org/10.1016/S0378-4266(99)00123-5
Rousseau, P. L., & Wachtel, P. (1998). Financial intermediation and economic performance: Historical evidence from five industrialized countries. Journal of Money, Credit and Banking, 30, 657–678. https://doi.org/10.2307/2601123
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Authors who publish with Jurnal Ekonomi dan Bisnis Airlangga agree to the following terms:The journal allows the author to hold the copyright of the article without restrictions.
The journal allows the author(s) to retain publishing rights without restrictions
The legal formal aspect of journal publication accessibility refers to Creative Commons Attribution Share-Alike (CC BY-SA).
Jurnal Ekonomi dan Bisnis Airlangga (JEBA) is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License
.png)
