CHALLENGES AND OPPORTUNITIES OF ESTABLISHING STOCK MARKET IN ETHIOPIA

Abstract

Stock exchanges have played a great role in the investment process in developed countries such as the United States, the United Kingdom, Japan, and so many others and have contributed to their development. this study assessed the challenges and opportunities of establishing stock market in Ethiopia. the study used descriptive and cross sectional research design to obtain the intended information. the research approach used was mixed approach. the sample size is 10 and it was selected purposively which means the sampling technique used was purposive sampling technique. both primary and secondary data were used. primary data were gathered from the employees and managers of national bank of Ethiopia. secondary data were also gathered from publication of scholars from academia ,financial institution, articles posted in different websites ,related arguments of scholars, forums reports ,different countries experience ,books, reports and websites were referred. Though the stock exchange market is necessary to the economic growth of Ethiopia. Its implementation will face many challenges that need to be addressed such as a low savings rate, macroeconomic instability , low level of public awareness absence of adequate accounting and auditing system , a small economy and the structure of companies that are family owned andtheabsence of financial intermediaries, financial advisory services, investment banks and so on.The study explained the role and opportunities of stock exchange such as foreign direct investment, prompting the financial system, market monitoring, source of capital and liquidity function are some of the opportunity assessed by the study. Based on the findings the researcher forwarded recommendations such as the complicated bureaucracy of the government should be advanced in order to establish stock market in the easy way the government should also encourage family owned companies to go public. the institutional capacity of the regulating body should be sufficient and strong in order to establish stock market in Ethiopia.