| Abstract: | The study aimed to examine the challenges and prospects of establishing stock market in Ethiopia. The study used mixed research approach and data collected from both primary and secondary sources. Primary data collected through questionnaire and interview instrument and Secondary data collected from world development indicator database and Ministry of Finance. This research employed a descriptive research design. To analyze quantitative data descriptive statistics such as percentages, frequencies, mean and standard deviation were employed. Qualitative data were prepared in narrative form and quantitative and qualitative data integrated to triangulate the findings. The key findings of the study revealed that unstructured transfer of capital, smaller saving across the country, Exchange rate fluctuation, unstructured business activity and unstructured capital allocation and among the major macroeconomic challenges of establishing stock market in Ethiopia. On the other hand, unaffordability of intellectual property rights, insufficiently strong institutions to protect property rights, monopolized financial services or products and lack of financial infrastructure are the major institutional challenges. In addition, the study indicated that establishing the stock market has a great contribution for growth by making capital resource flow easy from unproductive to productive. The launching needs a number of prerequisites included established public institutional infrastructures and lessens challenges to mobilize savings and to liberalize the economy. The study suggests that the government to create fast and effective financial operations by the stock market that require firms to comply with standards set by the financial accounting standards and advanced IFRS without affecting the unified global accounting system. Therefore, the responsible bodies for the initiation and establishment of stock market in Ethiopia recommended to work intensively to fulfill these preconditions. |
