Establishing Secondary Market in Ethiopia: Benefits and Costs Study


  • A.S.Kannan College of Business and Economics, Dilla University, Ethiopia.
  • Letenah Ejigu College of Business and Economics, Bahir Dar University, Ethiopia.


Secondary Market, Benefits and Costs, Ethiopia, Extant Literature Review


Review of the existing literature indicates that securities markets contribute to economic growth by mobilizing saving and channeling it to productive investment. Ethiopia, though having growing markets for primary issues of equity and debt securities, does not have a secondary market and as a result is not reaping the benefits.  The purpose of this study is to assess the benefits and costs of operating secondary market for equity and debt securities in the light of extant literature. In order to achieve this objective, the literature available on securities markets has been critically studied and summarized. The result of the research shows that Ethiopia should pave the way for secondary markets development in the medium term as their benefits exceed costs. The study concludes that the policymakers must seriously consider the launching of secondary market in Ethiopia.


Africa Market Entry Intelligence: Ethiopia Market Entry Brief, The Africa Group, (accessed in Nov.2011)

Bencivenga, V.R., B.D. Smith and R.M. Starr. (1996). Equity Markets, Transaction Costs, and Capital Accumulation: An Illustration, World Bank Economic Review, 10(2):241–65.

Binswanger, Mathias. (1999). Stock Markets, Speculative Bubbles and Economic Growth, Cheltenham: Edward Elgar Publishing.

BIS (2008). Quarterly Review Statistical Annex, December.

Etienne Musonera & Vincent Safari. (2008). “Establishing a Stock Exchange in Emerging Economies: Challenges and Opportunities”, The Journal of International Management Studies, Vol.3, No.2, August 2008: pp.62-68 (accessed in Nov.2011) 2011-05-31. (accessed in Nov.2011)

Jefferis, K. & Smith, G. (2005). The Changing Efficiency of African Stock Markets, South African Journal of Economics: 73:1

Kannan, A.S. (2011). Institutions and Infrastructure needed to promote capital market in Ethiopia, Proceedings of the National Research Conference on Financial Sector Development in Ethiopia, Dec.2011: Gondar.

Levine, R. (1996). Stock Markets: A Spur to Economic Growth, Finance and Development, 33 (1)

Levine, R. (1991). Stock Markets, Growth and Tax Policy, Journal of Finance, 46(4):1445–65.

National Bank of Ethiopia: Quarterly Bulletin, First Quarter 2010/11, Vol.26 No.1, Addis Ababa: 2011

NBE Directive No.SBB/50/2011, “Minimum Capital Requirements for Banks”, (accessed in Nov.2011)

News Headline, Capital Ethiopia, 6 June 2011, (accessed in Nov. 2011)

Obstfeld M. (1994) Risk taking, Global Diversification and Growth, American Economic Review, 84(5):1310-29

Rose P.S (2001). Money and Capital Markets: Financial Institutions and Instruments in a Global Marketplace, 8th Edition: McGrawHill-Irwin

Ruecker R. and Shiferaw K. (2011). A market potential assessment and road map development for the establishment of a capital market in Ethiopia, Ethiopian and Addis Ababa Chamber of Commerce and Sectoral Associations, Private Sector Development Hub

Tessema, A. (2003). Prospects and Challenges for Developing Securities Markets in Ethiopia: An Analytical Review, R&D Management, 15(1): 50-65.

World Bank. (2011). Ethiopia, Country Brief

Yartey C.A. & Adjasi. (2007). Stock Market Development in Sub-Saharan Africa: Critical Issues and Challenges, IMF Working Paper, WP/07/209.




How to Cite

A.S.Kannan, & Letenah Ejigu. (2022). Establishing Secondary Market in Ethiopia: Benefits and Costs Study. Indian Journal of Commerce and Management Studies, 4(1), 08–12. Retrieved from