The Viability of Establishing Capital Market in Developing Countries : The Case of Ethiopia

The outlook concerning worthiness and significance of establishment of stock market to nations in general, to developing nations in particular, have assorted to a great extent over time. Developing countries are trying towards improving and stepping up financial systems, by way of amplifying their security markets in order to perk up their ability to bring together resources to economy and fruitfully allot them to highly productive segments of the economy. This paper attempts to examine the feasibility of launching a stock market in Ethiopia. Regulatory framework, financial sector development and privatization and private sector development have been covered to analyze practicability of organizing “capital market”. The regulatory framework at hand is not adequate to establish a stock market and despite the boom in privatization, the country's huge companies still remain under control of the state. Nonetheless, it has been jeopardized by deficiency of financial liberalization and dominance of state banks