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Short-Run Behavior of Defensive Assets in the Ethiopian Commercial Banking Sector

Abstract: 

The purpose of this paper is to identify and measure the impact of factors that are responsible for shaping the behavior of defensive assets in the Ethiopian banking sector. The focus of the analysis is the Ethiopian banking sector rather than an individual bank. The paper deals with how the Ethiopian banking sector adjusts the position of  its defensive assets to changes in money supply, relative yields on asset holdings, discount rate, the demand for different bank assets, availability of funds, and legal reserve requirements. Except for required reserves, the discount rate and relative yields on asset holdings, the rest of the explanatory variables are statistically significant in explaining the short run behavior of defensive assets. Therefore, we can conclude that the initial stock of excess reserves, treasury bills, loans and their lag, narrow money supply, saving deposits of the public in different financial institutions, and bank capital are what strongly explain the short-run behavior of defensive assets in the Ethiopian banking sector. Finally it has been indicated that there is a negligible difference in the behavior of excess reserves & free reserves in the Ethiopian Commercial Banking Sector which is a clear indication of insignificant use of short-term borrowings in the Sector

Corporate Author: 
Demirew Getachew; Getenet Alemu; Worku Gebeyehu (Editors) and Ethiopian Economic Association
Publisher: 
Ethiopian Economic Association
ISBN/ISSN: 
978-99944-54-31-10
Primary Descriptors: 

Short-run Behavior

Secondary Descriptor: 

Defensive Assets

Geographic Descriptors: 
Ethiopia
Broad Subject heading: 
Commercial Banking Sector
Call Number: 
330.963 PRO 2013
Serial Key Title: 
Proceeding of the Tenth International Conference on the Ethiopian Economy
Publication catagory: 
Content type: 
Volume: 
I
Publication date: 
2013-06-03 00:00:00
Conference Place: 
EEA Multi-Purpose Building Conference Hall, Addis Ababa
Place of publication: 
Addis Ababa
Type of material: 
Book
Current frequency: 
Annually
Conference date: 
July 19 - 21, 2012