THE EFFECTS OF RECENT CURRENCY DEMONETIZATION ON ETHIOPIAN BANKING INDUSTRY: EVIDENCE FROM SELECTED PRIVATE COMMERCIAL BANKS

Abstract

The study evaluates the effects of recent currency demonetization on Ethiopian banking industry. The study was conducted based on the data gathered from four private commercial banks in Ethiopia at their head office and main branch at head office .The study used multi-stage sampling method with main dependence on purposive sampling method to select the four private banks from the 16 private banks operated in Ethiopia. A qualitative research approach was employed to answer the research questions. The primary data was collected using both open and close-ended questionnaire. The questioners were distributed to 394 respondents to have 300 (76%) usable response. The data collected using survey questionnaires with the purposive sampling technique were statistically analyzed with SPSS. The results show that the recent currency demonetarization has put positive impact in connection to opening new bank accounts, number of customers at branches, use of plastic money, E- banking and so forth. Consequently, current currency demonetization has negative effects on money lending, cash flow, liquidity and etc. Finally, the results suggested that to work more strongly to do better than the time before currency demonetization by bringing attention on directive, procedures and policies issued by concerned body.