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Financing Pattern of the Development Bank of Ethiopia (DBE)

Received: 16 December 2021     Accepted: 7 January 2022     Published: 17 January 2022
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Abstract

This study model over view the financing pattern of the Development Bank of Ethiopia ((DBE), Documentary evidence, annual reports, and accounts form the data basis of this paper. A Simple Multiple Regression Model was developed incorporating two independent variables (liquidity and shareholders fund) and one major dependent factor (loans and advances), representing the bank's financing pattern. The model was used to examine the extent to which these predictor variables explain the bank's loan and advances during the period 2006-2013. The regression results reveal that liquidity is an important factor in explaining the financing pattern of DBE in Ethiopia. However, a contrary impact has been documented concerning shareholders' funds. Based on the evident result from hypothesis one which says Liquidity does not have significant predictive power over DBE loans and advances can be conceived that the amount of loan and advances to be dished out in form of equity or credit financing by BOI is dependent solely on the availability of liquidity. The paper recommends the need for BOI and other DBE to maintain constant liquidity planning to keep abreast of societal credit needs in the form of loans and advances. In addition, the study further recommends the need for the bank to continually reduce the allocated amounts to shareholder's funds in the form of reserves to enable it to improve on developmental activities.

Published in International Journal of Finance and Banking Research (Volume 8, Issue 1)
DOI 10.11648/j.ijfbr.20220801.11
Page(s) 1-5
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2022. Published by Science Publishing Group

Keywords

Finance, Development Bank, Capital Structure, Liquidity, DBE of Ethiopia

References
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[3] Aspachs, O., E. Nier and M. Tiersset (2005), “Liquidity, Banking Regulation and the Macro Economy”: Evidence on Bank Liquidity Holdings from a Panel of UK–Resident Banks, rtf 05 Aspachs Nier Tiesset, pdf–Adobe Reader.
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[5] Capital Plus (2004), “The Challenge of Development in Development Finance Institutions”, Development Finance Forum, Chicago.
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[8] Essien, I. E. (2001), “The Role of Development Finance Institutions (DFIs) in the Financing of Small Scale Industries (SSIs),” Central Bank of Ethiopia Bullion Vol. 25, No3, pp. 3–6.
[9] Garson, J.; K. ElAlaoui; T. Malzy; T. Widezynski; J. P. Haezebrouck (2006), “Rethinking National Development Banks,” Bred Gestion, Paris.
[10] Gupta, S. P. (2002), “Statistical Methods,” Sultan Chand & Sons, New Delhi.
[11] Gibson, H. and E. Tsakalotos (1994), The Scope and Limits of Financial Liberalisation in Developing Countries: A Critical Survey”, The Journal of Development Studies, April, 30/3.
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[14] Jhingan, M. L. (2001), “Monetary Economics (5th Revised Edition)”, Vrinda Publication (p) Limited, Delhi.
[15] Jhingan, M. L. (2005), “The Economics of Development and Planning (38th Edition),” Nisha Enterprises, Delhi.
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[17] Long, M. (1983), “Review of Financial Sector Work”, Mimeo Financial Development Unit, World Bank, Washington D.C.
[18] Musa, F. I. (2005), “Modeling the Dividend Behavioural Pattern of Corporate Firms in Ethiopia," Unpublished Doctoral Dissertation, Ahmadu Bello University, Zaria.
[19] Myers, S. C. (1997), “Determinants of Corporate Borrowing,” Journal of Financial Economics, No. 5, 147–175.
[20] Nnanna, O. J.; A. Englama and F. O. Odoko (2004), Financial Markets in Ethiopia, Central Bank of Ethiopia, Abuja.
[21] Ofek, E. (1993), “Capital Structure and Firm Response to Poor Performance: An Empirical Analysis”, Journal of Financial Economics, No. 34, 3–30.
[22] Ovwielefuoma, G. (1993), “Financial Management and Investment Decisions in Ethiopia,” Investors Press Ethiopia Limited, Ikeja.
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[24] Shaw, E. (1973), “Financial Deepening in Economic Development,” Oxford University Press, New York.
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Cite This Article
  • APA Style

    Ismael Hussein Malela. (2022). Financing Pattern of the Development Bank of Ethiopia (DBE). International Journal of Finance and Banking Research, 8(1), 1-5. https://doi.org/10.11648/j.ijfbr.20220801.11

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    ACS Style

    Ismael Hussein Malela. Financing Pattern of the Development Bank of Ethiopia (DBE). Int. J. Finance Bank. Res. 2022, 8(1), 1-5. doi: 10.11648/j.ijfbr.20220801.11

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    AMA Style

    Ismael Hussein Malela. Financing Pattern of the Development Bank of Ethiopia (DBE). Int J Finance Bank Res. 2022;8(1):1-5. doi: 10.11648/j.ijfbr.20220801.11

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  • @article{10.11648/j.ijfbr.20220801.11,
      author = {Ismael Hussein Malela},
      title = {Financing Pattern of the Development Bank of Ethiopia (DBE)},
      journal = {International Journal of Finance and Banking Research},
      volume = {8},
      number = {1},
      pages = {1-5},
      doi = {10.11648/j.ijfbr.20220801.11},
      url = {https://doi.org/10.11648/j.ijfbr.20220801.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20220801.11},
      abstract = {This study model over view the financing pattern of the Development Bank of Ethiopia ((DBE), Documentary evidence, annual reports, and accounts form the data basis of this paper. A Simple Multiple Regression Model was developed incorporating two independent variables (liquidity and shareholders fund) and one major dependent factor (loans and advances), representing the bank's financing pattern. The model was used to examine the extent to which these predictor variables explain the bank's loan and advances during the period 2006-2013. The regression results reveal that liquidity is an important factor in explaining the financing pattern of DBE in Ethiopia. However, a contrary impact has been documented concerning shareholders' funds. Based on the evident result from hypothesis one which says Liquidity does not have significant predictive power over DBE loans and advances can be conceived that the amount of loan and advances to be dished out in form of equity or credit financing by BOI is dependent solely on the availability of liquidity. The paper recommends the need for BOI and other DBE to maintain constant liquidity planning to keep abreast of societal credit needs in the form of loans and advances. In addition, the study further recommends the need for the bank to continually reduce the allocated amounts to shareholder's funds in the form of reserves to enable it to improve on developmental activities.},
     year = {2022}
    }
    

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  • TY  - JOUR
    T1  - Financing Pattern of the Development Bank of Ethiopia (DBE)
    AU  - Ismael Hussein Malela
    Y1  - 2022/01/17
    PY  - 2022
    N1  - https://doi.org/10.11648/j.ijfbr.20220801.11
    DO  - 10.11648/j.ijfbr.20220801.11
    T2  - International Journal of Finance and Banking Research
    JF  - International Journal of Finance and Banking Research
    JO  - International Journal of Finance and Banking Research
    SP  - 1
    EP  - 5
    PB  - Science Publishing Group
    SN  - 2472-2278
    UR  - https://doi.org/10.11648/j.ijfbr.20220801.11
    AB  - This study model over view the financing pattern of the Development Bank of Ethiopia ((DBE), Documentary evidence, annual reports, and accounts form the data basis of this paper. A Simple Multiple Regression Model was developed incorporating two independent variables (liquidity and shareholders fund) and one major dependent factor (loans and advances), representing the bank's financing pattern. The model was used to examine the extent to which these predictor variables explain the bank's loan and advances during the period 2006-2013. The regression results reveal that liquidity is an important factor in explaining the financing pattern of DBE in Ethiopia. However, a contrary impact has been documented concerning shareholders' funds. Based on the evident result from hypothesis one which says Liquidity does not have significant predictive power over DBE loans and advances can be conceived that the amount of loan and advances to be dished out in form of equity or credit financing by BOI is dependent solely on the availability of liquidity. The paper recommends the need for BOI and other DBE to maintain constant liquidity planning to keep abreast of societal credit needs in the form of loans and advances. In addition, the study further recommends the need for the bank to continually reduce the allocated amounts to shareholder's funds in the form of reserves to enable it to improve on developmental activities.
    VL  - 8
    IS  - 1
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Author Information
  • Department of Accounting and Finance, College of Business and Economics, Oda Bultum University, Chiro, Ethiopia

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