The Assessment of Foreign Currency Mobilization on the Performance of Private Commercial Banks

Abstract

The purpose of this study is to assess foreign currency mobilization on the performance of private commercial Banks with the intention of spotting, analyzing and exposing factors that hinder private commercial banks in mobilization of foreign currency by putting five privately owned Banks under study which are Awash Bank S.C. (AB), Dashen Bank S.C. (DB), United Bank S.C. (UB), Lion International Bank S.C. (LIB), Berhan International Bank S.C. (BRiB)). In order to realize the objectives of the study the researcher has utilized descriptive type of research approach gauged by qualitative analysis techniques, while purposive type of sampling was used in which the researcher contacted only most relevant respondents. The major problems contributing to the decline of foreign currency mobilization are the increasing bargaining power of exporters from time to time, the price decline of export items in international market forcing exporters to keep their products in store rather than sell it out, for various reasons notable numbers of exporters not keeping their export commitments, lack of sufficient number of genuine exporters, limited exportable items within the country, lack of unreserved support and feedback from the government on the export sector, export fund diversions, the existence of informal and parallel markets, heavy domination of few primary agricultural export commodities, private Bank’s failure to maintain good relationships with foreign correspondent Banks, ambitious mega projects of the country consuming excessive amounts of foreign currency. And as a recommendation the study has stipulated the following mechanisms that needs to be taken by private Banks which are giving much more emphasis to export sector, working with multiple number of remitting agencies, shaping their internal policies and procedures in line with the rules and regulations of the governing body.