Journal of
Economics and International Finance

  • Abbreviation: J. Econ. Int. Finance
  • Language: English
  • ISSN: 2006-9812
  • DOI: 10.5897/JEIF
  • Start Year: 2009
  • Published Articles: 346

Article in Press

The Prospect and Challenge of Establishing Stock Market in Ethiopia

Meskerem Waktola

  •  Received: 16 June 2021
  •  Accepted: 27 July 2021
This study intended to assess the challenges and prospects to establish stock market in Ethiopia. Stock market is highly complex as one form of capital market. A well functioning stock market plays an important role not only for the development of financial sector but also contributes for economic advancement of any nation. In light of this, the study tries to explore three major determinant factors such as institutional, macroeconomic and policy aspects required to establish stock market in Ethiopia. The study employed mixed approaches that include in-depth review of literature, government policies and strategies, collection of relevant primary data, key informant interview with strategically positioned senior officials in different organizations in regardes to stock market establishment. As the findings indicate, except for strong dream by the Government, there is weak institutional and policy arrangement to initiate, stimulate establishment of strong and functional stock markets in Ethiopia. Thus, the study concludes that policy maker should carefully consider regarding: Institutional factors: legal proclamations and trade law, setting up of public authority responsible to control the stock market, development professional and issue of financial intermediaries, education and awareness, private sector development, market infrastructure and issues of corporate governance which is still underdeveloped. Regarding macro-economic factors, given substantive economic progresses registered over the past two decades, Ethiopia has highly promising economic environment to establish and operate stock market. To encourage participation private sector, an important monetary and fiscal policy components such as taxation and interest rate policies should be considered in order to move faster establishment.

Keywords: Stock market, financial market framework, key policy factors, Ethiopia