DEBRE TABOR UNIVERSITy

FACULITY OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

ARESEARCH PAPER ON THE ASSESSMNT OF THE ROLE OF FINANCIAL INSTITIUTION IN

PROMOTING PRIVAT INVESTMENT ( IN CASE OF ABAY BANK) IN DEBRETABOR BRANCH

ARESEARCH PAPER SUBMITED IN PARTIAL FULFILMENT OF THE

REQUIERMNT FOR BA DEGREE IN ACCOUNTING AND FINANCE

GROUP MEMBER NAME ID NO

1 .ABEBE DINKU……………………………....………….FBE®798/08

2 .ADUGNAW MINYAHIL …………………………….FBE®822/08

3 .BEWKETU TILAHUN ……………………………….FBE®842/08

4 .MINALE SENTAYEHU………………………….....FBE®914/08

ADVISER:SEFIWSEW ZELEKE(MSC)

DEBRE TABOR, ETHIOPIA

(June, 2018)

I
ACKNOWLEDGMENT

First and for most, we would like to thank the almighty God for helping to do this study.
Secondly, our best appreciation is belongs to our adviser Sefiwsew Zeleke put ours the right
track of research proposal and for his continues and endless assistance to write up the final
research paper. Finally, we would like to express our gratitude for my best friend for their
support to ours in accomplish this research paper.

I
ABSTRACT

This research paper is titled the role of financial institution in promoting private investment in
case of Abay bank in Debretabor branch. the objective of the study is to assess the role of
financial institution in promoting private investment in case of Abay bank in Debretabor town.
Only primary data were obtained and use. Primary data were collected through questioner from
employees of the bank and investors that promoted by Abaybank, and from manager of Abay
bank and investment commission by using structured interview.

The study used censuses survey techniques. The reason behind this is the target population of the
study are relatively small, to enhance the accuracy and reliability of the study finding by
eliminated the sampling bias and also questioners are very suitable in census surveying
research. The collected data analyzed and interpreted by using descriptive data analysis method.

The finding of the study shows that the role of Abay bank in promoting private investment by
giving credit extension, encouragement of small scale industry as source of finance and financial
and investment advice. The major activities performed in Debretabor town are service sector
and industrial sector that are more performed in the town, and there are investment related
problems such as, inflation , peace and security of the country, network, light etc

Finally the researchers were put possible recommendation for the study. Therefore the bank
would be linkage with investment commission to know investors willingness to invest and
investment related problems.

TABLE OF CONTENTE Page

Content

Acknowledgment………………………………………………………………….......…..I

Abstract……………………………………………………………………….............……….II

II
Table of content ……..……………………………………………………......……..……III

List of Table....................................................................................

CHAPTER ONE

1. Introduction………………….………………………………………………..........….….1

1.1 Background study…………………………………….…………………………........1

1.2 Statement of the problem………………………………………………………....2

1.3 Research question ……………………………………………………….....………..3

1.4 Objective of the study………………………………………………….....…………4

1.4.1 General objective ………………………………………………….....……….4

1.4.2 Specific objective……………………………….………………….....….……4

1.5 Significant of the study…………………………………………………….....….….4

1.6 Scope of the study………………………………………………………........….…...4

1.7 Limitation of the study ……………………………………………..…..…...…..….4

1.8 Organization of the study ……………………………………..……………....…...5

CHAPTER TWO

LITERACHER REVIEW

2 Introduction……………………………………………………….………..................…….6

2.1 Investment and specialized financial institution ………………..……..6

2.1.1 Investment perspective in developing county ………..…………6

2.1.2 Area of investment in Ethiopia ……………………….…………………..6

2.1.3 The objective of investment promotion ……………………….……7

2.1.4 specialized financial institution ………………….……………………….8

2.1.5 owner ship of financial institution …………………..………………….8

2.1.6 Abay bank……..…………………………………………................………………9

2.1.7 function of Abay bank …………………………………………….........………9

III
 2.1.8 ownership of Abay bank……………………………………….......….………10

2.2 Empirical literature review …………………………………….......…………….11

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

3 Research design………………………………………………………….............………12

3.1 Sampling technique……………………………………………........…………12

3.2 Source of data ……………………………………………………...........………12

3.3 Data collection technique ……………………………………………....….12

3.4 Data analysis and presentation …………………………………….….12

CHAPTER FOUR

4. Data analysis and Interpretation…………………………………………13

CAPTER FIVE

5. conclusion and Recommendation…………………………..……………..….22

5.1 Conclusion…………………….………………………………………...............……22

5.2 Recommendation………………….………………………………..........…….…23

Reference………………….…………………………………………..................………….24

Appendix…………………….………………………………………..................…………..25

List of Table
Table Content page

IV
4.1 Analysis of data gathered from employees of Abay bank......................................

4.1.1 Personal information of respondant................................................................

4.1.2 Abay bank promot private investment...........................................................

4.1.3 Investment Activities.......................................................................................

4.1.4 Investment condition in the current periodt..................................................

4.1.5 Investment changes .......................................................................................

4.1.6 Special investment services..........................................................................

4.1.7 Challenge for growth of investment.............................................................

4.2 Informations gathered from investors that promoted by Abay bank in

Debretaborbranch.........................................................................................................

4.2.1 Personal information of investors..............................................................

4.2.2 Abay bank promote private investors.........................................................

4.2.3 Ways of Abay bank to promote investors..................................................

4.2.4 Investment Activities...................................................................................

4.2.5 The current investment condition..............................................................

4.2.6 Special services of the bank....................................................................

4.2.7 Challenges of investment..........................................................................

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 CHAPTER ONE

1. INTRODUCTION
1.1 Background of the study
Efficient and stable investment activities present various opportunities to developing countries.
In fact, investment is associated with both economic and social rewards. That is, investment not
Only plays an important role in job creation but also has a role to play in provision of both
infrastructure and social services. However, finance is required for a country to reach in a
sustainable level of investment. To provide the needed finance, there are varieties of institutions
rendering financial services; such institutions are called financial institutions. Banks are among
such institutions that render financial services. They are mainly involved in financial
intermediation, which involves channeling funds from the surplus unit to the deficit unit of the
economy, thus transforming bank deposits into loans or credits,(Mugume, 2008).
Banks have historically been viewed as playing a special role in financial markets for two
reasons. One is that they perform a critical role in facilitating payments; the other is that they
have long played an important role in channeling credit (loan) to households and businesses
(Gurley, et al, 2006).

Investment were process of exchanging income during one period of time for an asset that’s
expected to produce earning in future period, or it is defined as the placing of capital on lying out
of money in a way intended to secure income or profit its employment (Cambell, 1994).

Financial institutions are involved in the process of increasing the level of investments of various
Economic sectors, particularly the capital goods needed for raising productivity. In developing
countries like Ethiopia, income is very low and as such high level of investment cannot be
executing the ideas. It is instructive to note that the banking sector has stood out in the financial
sector as of prime importance, because in many developing countries of the world, the sector is
virtually the only financial means of attracting private savings on a large scale, (McKinnon, 2007
as cited by Adeniyi, 2006)

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Financial institutions historically, have always played a vital role in stimulating economic
growth and development. This role stems largely from their basic fundamental function in the
'capitalization' of savings through which surplus funds are mobilized in financing productive
investments. With the new Banking and Financial Institutions act coming into effect on 1st
October 1989, the connotation of "financial institutions" now includes a whole multitude of
institutions ranging from commercial banks, finance companies, merchant banks, discount
houses and money market intermediaries to institutions involved in credit, development finance,
leasing and factoring (Journal economist of Malaysia :1990,).

Banks are among those financial institutions that owned by both state and private, from those
Abay bank is one of privately owned financial institution engaged in providing short, medium
and long term credit. Since its establishment has fulfilled all the necessary requirement of the
national bank of Ethiopia to set up a bank, and officially established on July,14,2010 and started
its operation on November,4,2010 in Ethiopia. the bank was expanded there branch on different
area of the country, Abay bank in Debre tabor branch is the one which was established on
January,2012. The bank provide fast and modern banking services and provide professional
advices for clients in order to they became successful in there business. In this branch the total
number of employees are 10 excluding guardians and cleaner of the bank. Abay bank gives the
banking service from Monday up to Saturday morning 8:00 AM up to 9:00 PM at night. The
bank promote private investors and the overall economy of Debre tabor town.

1.2 Statement of the Problem

Financial institution in Ethiopia promotion is one of the approaches that the government has
focused its attention in recent years in pursuit of its long term vision of providing sustainable
financial services to majority of Ethiopian population for investment purpose. Before the current
financial and banking restructuring took place, most of financial services for rural and urban
investment were offered by the few licensed commercial banks. The realization of the above
shortcoming led to the Government's decision to initiate deliberate action to facilitate alternative
approaches in the creation of a broad based financial system comprising of a variety of
sustainable institutions with wide outreach and offering diverse financial products. The
government's choice of financial institutions was influenced by the conviction that, given
adequate attention, financial institutions have the potential to contribute considerably to the

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Promotion of private investments in the country because it is more adapted to the needs of the
investors. For that reason, the government has put in place a competitive, efficient and effective
financial system bringing about increased access to basic financial services by the majority of the
Ethiopians particularly investors. Therefore it was worth assessing the contribution of financial
institutions in promoting private investment. Economic development is something all countries
especially the less developed ones strive for so, this processes cannot take place without efficient
mobilization and allocation of resources for the production of goods and services in economy.
(MelakYohannes, 2011).
Tesfaneh yared,2010 conducted his paper on the role of financial institution in case of
AddisAbaba by using time series data from 1995-2007 and finally he found that financial
institution serve as aleading sector for unemployment reduction.
There are a number of prior studies conducted on the assessment of the role of financial
institution and investment in the area of AddisAbaba.
For instance(Melakyohanns, 2011),(Tesfaneh yared,2010) were conducted their studies on the
role of financial institution and investment in Addis Ababa. However; this researchers
investigate the role of financial institution and investment, but they do not assess how to
financial institution to promote private investment in Debre tabor town in case of Abay bank. As
per the researchers knowledge no study is conducted on the assessment of the role of financial
institution in promoting private investment in Debre tabor town in case of Abay bank. There
fore, this study specifically aims to assessed how to Abay bank promoting private investors in
Debre tabor town.

1.3 Research question

 How to Abay bank promote private investment in Debre tabor town?
 What is the investment condition of Debre tabor town in the current period?
 What are the investment and related activates performed in Debre tabor town?

1.4Objectives of the study

1.4.1 General objective

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The general objective of the study is to assess the role of financial institution in promoting
private investment in Debre tabor town (in case of Abay bank).

1.4. 2 Specific objectives

 To identify the way of Abay bank to promote private investment in Debre tabor
town.
 To assess the current investment condition of Debre tabor town
 To assess investment and investment related activity performed in Debre tabor town.

1.5 Significance of the study

The researchers believe that the study is important for the following point:-
 It helps as a bench mark for policy makers on financial institution to play role in private
investment and helps to identify the problem of private investor.
 The study will helps any financial institution to identify private investment promotion
means.
 It will be use as reference for other researcher to conduct relative title with this study.

1.6 Scope of the study

Geographically, the study covers only in Debre Tabor branch on the assessment of role of
financial institution in promoting private investors in case of Abay bank. because of the number
of many private financial institution no study is conduct on the role of financial institution in
case of Abay bank, the researcher use descriptive method to distribute questions for Abay bank
employees , investors ,bank manager and investment office.

1.7 Limitation of the study

As any research requires sufficient time , reference materials ,finance, up-to-date information
and the like, the researcher also encounter some of these challenges in carrying out this study. so
This will take a lot of the researcher’s time, effort, and cost.

1.8 Organization of the paper

These research papers are organized in five chapters. The First chapter is about the core purpose
of the study which includes background of the study, statement of the problem, research
question, objectives of the study, significance of the study, scope of the study, and The second
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chapter includes literature review of investment and financial intuitions. The third chapter
describe about methodology of the study and data source, research design, methods of data
collections, sampling techniques and source of data. The fourth chapter includes data analysis
and presentation. chapter five present conclusion and recommendation .

CHAPTER TWO

LITERATURE REVIEW

2. Introduction
This chapter deals about part of investment and specialized financial institution in detail. In
investment part it includes investment prospective in developing countries, areas of investment
in Ethiopia, and problem of investment in emerging markets. The second part of this chapter

5
specialized financial institution part includes specialized financial institution in developing
countries, and functions and owner ship of banks.

2.1. Investments and specialized financial institutions

An investment is the current commitments resources for a period in the expectation of receiving
future resource are committed; the expected rate of inflation and the risk the uncertainty of the
future payments (K. Relly & A.Norton 2004,).

2.1.1. Investment prospective in developing countries

The investment prospective in developing countries might be considered the most positive
teachers of the global economy. These countries are expected to grow features than the
industrial works for the fore seeable future as they have in recent year the invest climate in sub-
saran Africa remains challenging despite some improvement private investment both domestic
and foreign is still low. In this content regions has four components; promotion of small
business capital market development, financing of projects in manufacturing instruction only and
natural resources based industries and advisor services and technical assistance for government
and business (IFC , 1994).

2.1.2. Areas of investment in Ethiopia

In developing countries like Ethiopia, some investment projects require substantial investment
out lays and their gestation periods might be long and may not be attractive and /or profitable to
private investors. Such projects normally core that give rise to back ward and fore ward linkages
and are regulated to the overall national economy. Some areas have been reserved for public
investments and others for joint ventures. All other areas opened and reserved to private
domestic and/or foreign investments. The high lights are: Areas reserved for public sector
investment, The areas of investment reserved for government are; postal service, large scale
supply of electric energy, and rail and large scale air transport services, collaborative investment
the government may invest, on its own or in collaboration with private investors, both foreign
and domestic, on limited key areas essential for the development of the economy to stimulate
development in a responsible manner. The essential includes: capital and technology incentives,
investment in large scale mining and energy production,, large scale Pharmaceutical and
fertilizer plants; and industries supplying strategic raw materials to chemical industries, Private

6
investors both domestic and foreign, can invest more areas and sectors of the economy on their
own, in partnership or in joint venture. Small and medium transport operations, production and
supply of electric energy and certain economic activate with in the financial and technical
capability of nationals are designed to be exclusively reserved to them. Furthermore, the
government shall study the conditions and modalities of private domestic investments in banking
and insurance businesses and decide their fact. Most other areas and sectors are open for both
domestic and foreign investors. This include investment areas and sectors indicated above under
“investment opportunities” in agriculture and agro-possessing; in manufacturing and
manufacturing industries. Furthermore, as mentioned above, there are also possibilities for
collaborative investments (Asad,M,1997).

Limited access to equality or long term debt financing in emerging markets can defer private
investment financial institutions plays an important role in promoting private sector firms where
it is otherwise not available and reducing the aggregate volatility of capital flows to these firms
(IFC, 2002) .

Ethiopia governments comprehensive structural adjustment program designed to transform the

instrument of economic management and raise investment particularly, but the private sectors
will be supported (World Bank; 1993)

2.1.3. The objective of investment promotion

 To improve countries image with in the investment community as favorable locations or

investment.
 To generate investment directly.
 To provide service to prospective and current investors or investment service activity
.(Louis T.well&AlinuG.Wint Marketing acountry; promotion as atool for Atter acting
forigninvestmnt .Rev.ed.(washengeton,D.c; IFC 2000),p,4,9.)

2.1.4. Specialized Financial Institution

Apart from the concern with the growth and maturity of commercial banks, a further
concern should be the emergence and development of specialized financial institutions.
Specialized financial institutions include those that generally raise funds through long-
term or specialized types of deposits. These specialized intermediaries often lend to

7
 particular types of borrowers such as investment, industrial, construction and development
banks. Their importance in overall economic growth emanates from the specific
function they play building on their objectives. Specialized financial institutions usually
perform the functions such as;- advance long term loans and credits for the development of
specific sector , act as a granter of liability and project for variable entitys, supervise and
control the activity of projects financed by the bank , participation in some case in the equity
of business entity and project , accept current and time deposit so as to mobilized funds for
investment and monitor and follow up and use of loans advanced , to finance development
of housing sectors, to enable large scale industries, to encourage development of
enterprinors , to promote economic activity in back ward regions , to assess the growth of
capital market .(Good heart-will coxco,inc,1996).

2.1.5. OWNERSHIP OF FINANCIAL INSTITUTION

State-owned and privately-owned

The financial institution can be owned both by the state and privately. In the developing countries it is a
positive characteristics that privately-owned financial institution are profit oriented institutions and
can acquire more funds for credit purposes; private enterprises more readily contact private banks
which can employ more-qualified experts that state institutions can't, and because they are profit
oriented they select and finance more efficient developments. The advantages of state financial
institution is that their collection of capital and placing are guaranteed by the state; they realize projects
complying with national priorities,(Alexander Laurin,1998,p.9)

2.1.6. Abay bank

Among the institutions whose role in the development of the less developed regions is well
Recognized but inadequately emphasized are the bank playing multiple roles,

These institutions have helped promote, nurture, support and monitor a range of activities,

though their most important function has been as drivers of industrial development

All underdeveloped countries launching on national development strategies, often in the

Aftermath of decolonization, were keen on accelerating the pace of growth of productivity and
per capita GDP. This was the obvious requirement for alleviating poverty and reducing the
developmental gap that separated them from the developed countries. To realize this goal, they

8
considered industrialization to be an important prerequisite. This stemmed from the perspective
that modern economic growth was a process characterized by an increase in the share of
employment in the non-agricultural sector, and within the latter by a change in the scale of
productive units, the growth of factory production and a shift from personal Enterprise to the
impersonal organization of economic firms, in this case Abay bank played grate role in national
development by encouraging investments. (Mesenbet Shenkute,Augest,17,2015, co-Founder and
president of Abay bank)

2.1,7 FUNCTION OF ABAY BANK

The principal function of Abay bank is the provision of medium and long term finance for fixed
assets. It also helps to provide, in addition to finance, such other essentials of productive
investment as entrepreneurship, technical skills and managerial experience. It relies on the
success of the enterprises it finances for recovery of its investment rather than on the security of
collateral, and it does so in a manner that balances commercial standards of operation with
economic benefit Promotional activity is crucial to its role.... in the concept of the Abay bank.
are combined several use or role in tradition various mobilization of financial resources and
promotion of investment, special assistance to particular groups or regions in the country and
pursuit of broad national economic objective filling perceived gap adequacies in the element
required for productive investment. The role of Abay bank in the economy of a country by
tracing the idea such as;
 to promote mudium and small scall industries.
 to finance development of housing sector.
 to enable large scale industries.
 to help in agricultural and rular development.
 to help to review industrial units.
 to encorage development of interpreneurs.
 to promote economic activetes in backward regions.
 to assist in growth of capital markets.

(Mesenbet shenkute,2015,augest 17,co-founder and president of Abay bank).

2.1.8 OWNERSHIP OF ABAY BANKS

The Abay banks can be owned by the privately. In the developing countries it is a positive
characteristics that privately-owned Abay banks are profit oriented institutions and can acquire
more funds for credit purposes; private enterprises more readily contact private banks which

9
can employ more-qualified experts that state institutions can't, and because they are profit
oriented they select and finance more efficient developments. The advantages of private Abay
banks is that their collection of capital and placing are guaranteed by the private; they realize
projects complying with national priorities; and among others, they undertake a considerable
role in the financing of infrastructure, which private banks are more inclined to do. There is
also an opinion according to which in the developing countries profit has not proved to be a
means of allocation of satisfactory efficiency, hence, in accordance with the long-term ideas
of investors, developments must be financed by private-run institutions. The governments have
to support Abay banks and have to ensure them funds for credit purposes. This is held by the
majority of economists concerned with this topic. This also means that the governments can
influence the direction of credit granting. However, the view is also held that regarding
personnel, organization and business policy, the Abay banks must be independent of the state.
In this study summarized the essential features of privately owned Abay banks; Industrial
entrepreneurs are more willing to talk with private than with public institutions,

Entrepreneurs are more willing to give up equity to private institutions, Abay banks tend to be
more efficient than public banks in process sing loans and investments Abay banks find share-
holders can be more effective than public banks in mobilizing private foreign capital and
know-how for local projects, Private banks prefer to promote on an equity basis, where they
buy shares directly or are given an option to convert a part of a loan into stock, ( Mesenbet
Shenkute,Augest,17,2015, co - founder and presedant of Abay bank).

2.2 Empirical literature review

Economic development is something all countries especially the less developed ones strive for
but this processes cannot take place without efficient mobilization and allocation researches for
the production of goods and services in economy. So some researchers conduct a research on the
contribution of financial institution for investment and other economic development issues from
those. (MelakYohannes, 2011) conduct his paper on the title of financial institution and
investment on Ethiopia. He try to indicate that financial institution post highly encourage
investment as well the expansion of investment in other way help the finical institution to stand
by two legs because investor are the high profit customer of financial institution and
(TesfanehYared, 2010) conduct his paper on the role of financial institution in employment

10
creation through expanding of investment in case of Addis Ababa by using time series data
form 1995-2007 and finally he found that financial institution serve as a leading sector for un
employment reduction but all of them concerned on Addis Ababa.

However this researchers assess the role of financial institution and investment, but they do not
assess how to financial institution promote private investment in Debre tabor town in case of
Abay bank.As per the researchers knowledge no study was conducted on the assessment of the
role of financial institution in promoting private investment in Debretabor town in case of Abay
bank.

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

3. Research design
The study under consideration was applied the descriptive research design and various data
collection methods which are suitable for successful accomplishment of the descriptive research.
The major purpose of descriptive research is description of the state of affairs as it exists at
present. The study was under taken in Abay bank in Debre tabor town.

3.1 Source of data

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The researcher used primary sources of data in order to gather necessary data regarding the
subject of study from the bank and investors of Debretabor town. Primary source of data was
used to gather necessary data from the respondent for the completion of the study.

3.2 Data collection technique

This study used primary data collection techniques such as open ended and close ended questionnaires
distributed for employees, manager of the bank, investors and investment office of Debretabor town.

3.3 Sampling technique

To conduct this study the researchers used census surveying techniques, the reason behind for
use of census techniques were the total population who invited by the researchers are relatively
small, the total population of Abay bank in Debretabor branch were 10 excluding guardians and
cleaner and the total number of investor who promoted by Abay bank were 24 in Debretabor
town ,so the researchers conduct their study on total population of 34 .
3.4 Data analysis and presentation
After the data collect, the researchers use descriptive method of analysis like percentage and
table.

CHAPTER FOUR

Data analysis and interpretation

4. Introduction

In this chapter deals with analysis and interpretation on the base of primary data gathered
through interview and questioner from employees of Abay bank in Debre tabor branch and
Debre tabor investment commission has been analyzed and interpreted .this study answer
research questions listed in chapter one, also the analyses include background of private
investment in Debre tabor town, in order to acquire information for the study 34 questioners
were distributed to employees of Abay bank and investors of Debre tabor town that promoted by
Abay bank.

12
 4.1 Analysis of data gathered from employees of Abay bank

From the total of 10 questioners are distributed for employees of Abay bank in Debre tabor
branch, from those the total of 10 questioners completed fully.

The first part of the questioner were personal information of the respondents which
includes ,sex, age, academic qualification, work experience and job status shown in the table
below in 4.1.

Table 4.1.1 personal information of respondent

Sex Male Female Total

No of 8 2 10
respondent
Percentage 80% 20% 100%
Age 18-30 31-40 41-50 50 and Total
above
No of 6 2 0 2 10
respondent
Percentage 60% 20% 20% 100%
Academic Elementary High Diploma Degree Master PHD Total
qualification school and
Certificate above
No of 9 1 10
respondent
Percentage 90% 10% 100%
Job status Casher Economist Loan Senior Other Total
(planner) officer officer

13
 No of 3 1 1 1 4 10
respondent
Percentage 30% 10% 10% 10% 40% 100%
Source, questioner 2018 for employees of Abay bank in Debretabor branch

The above table shows respondent background on sex that 80% of the respondent are male and
20% of the respondent are female. This shows the bank have more male employees.

The second part of the table shows age of the respondent which include 60% of the respondent
were found on the age of 18-30, 20% of the respondent were found on the age of 31-40, and
20%of the respondent were found on the age of 50 and above, but there is no respondent of their
age found on the age of 41-50.this sows most of the employees of the banks age were found on
the age from 18-30,The third part of the table shows respondents academic qualification which
include 90% of the respondent are Degree and 10% of the respondent is Master. This shows
most of the employees of the bank are Degree holder,And the fourth part of the table shows job
status which include casher 30%, economic (planner) 10%, loan officer 10%, senior officer 10%,
other specified 40% ,from this it shows more respondent respond on other like , customer
service.

4.1.2 Abay bank promote private investment

Question Description Frequency Percentage

1,How does abay A .Credit extension 50%
bank promote private 5
investment in Debre
tabor town by means
of ;
B .financial and 3 30%
investment advice
C .encourage small 2 20%
and medium scale
industries by means of
sources of finance
Total 10 100%
2.Is it the way of abay 100%
bank to promote A .Yes 10
private investment is
good which listed in
question no 1?
0 0
B. No
Total 10 100%

Sources questioner for employees of Abay bank in year 2018

14
From above table 4.2 response of respondent shows that Abay bank promote private investment
in Debre tabor town contained credit extension 50 % , financial and investment advice 30% ,
encouragement of small and medium scale industries as sources of finance 20% ,from this the
researchers concluded that the bank were focus on giving credit extension 50% . and on question
number two does those way of Abay bank to promote private investment is good or not?
According to data gathered all respond yes , so the way is good.

4.1.3 investment activities

Question Description Frequency Percentage

3.whch investment From agriculture
activity are performed sector
in Debre tabor town
that promoted by A .Irrigation 4 40 %
Abay bank B .Cattle breeding 3 30 %
C .Forestry 3 30 %
D .If other
Total 10 100 %
From industrial sector

A .Manufacturing 3 30 %
B .Construction 6 60 %
C .Merchandise 1 10 %
D .If other
Total 10 100 %
From service sector

A .Hotel 7 70%
B .Transportation and 3 30%
communication
C .Hospital
D . If other
Total 10 100 %
Sources, questioner for employees of Abay bank in year 2018

According to the data collected from the respondent about which investment activity are
performed in Debre tabor town that promoted by Abay bank, from agriculture sector ,irrigation
40% ,cattle breeding 30% ,forestry 30% , from industrial sector ,manufacturing 30% ,
construction 60% , merchandise `10% and from service sector Hotel 70% , transportation and
communication 30 % ,this implies that most respondents respond that from service sector the
bank focus on irrigation 40% ,from industrial sector focus on construction 60% and from service
sector focus on hotel 70%, researchers concluded that the bank focused on industrial and service
sector. Construction is focus on house construction.

15
4.1.4 investment condition in the current period

Question Description Frequency Percentage

4. What is the A .at higher stage 2 10%
investment condition B .at growth stage 3 30%
of Debre tabor town
in current period by C .at infant(low) stage 6 60%
considering their
Total 10 100%
capital flow
Source questioner for employees of Abay bank in Debretabor branch for year 2018

As presented in the above table the investment condition in Debretabor town at current period
based on information gathered at higher stage 10% , at growth stage 30% , at infant (low) 60% ,
from this the researchers concluded that the investment condition Debretabor town was at infant
(low) stage.

4.1.5 Investment changes

Question Description Frequency Percentage

5 .Is there any change Yes 7 70 %
existed from the past No 3 30 %
in investors
participated area
Source ,questioner for employees of Abay bank in Debretabor branch for year 2018

The data were collected from respondent shows that changes clearly that most of them respond
yes 70 % in addition the change by the respondent the recent policy and strategy of the bank to
provide only for priority area by laying down the past, it provide more for service sector ,
industrial sector, and in slightly for agricultural sector, but at past It was more focus on
agricultural sector.

4.1.6 special investment service

Question Description Frequency Percentage

6 .Does the bank give Yes 8 80%
unique service than
other banks, other
than lending and No 2 20%
financial and
investment advice?
Source questioner for employees of Abay bank in Debretabor branch in 2018

Most respondent give answer by starting the nature of Abay bank as specialized financial
institution to promote the national development agent through development finance and close
technical support to visible project from the prioritize area of the government by mobilizing fund

16
from domestic and foreign through continues capacity building, customer focus concern for the
wider environment and from the above table shows most respondent said yes 70% and 30% of
the respondent respond no, according to data gathered the bank give service from Monday –
Saturday ,morning 8:00 PM to 9:00 PM night considered as special service.

4.1.7 challenge for growth of investment

Question Description Frequency Percentage

7.Is there any Yes 7 70 %
challenge for growth
of investment? No 3 30 %
Source :questioner for employees of Abay bank in Debretabor branch in 2018

Because of government policy , peace and security of the country and inflation in the country
most respondent respond yes 70%,and no 30% ,from this the researchers conclude that this
challenge were an obstacle for growth of investment in the town.

4.2 Questioner collected from investors that promoted by Abay bank in Debretabor
branch

From the total of 24 questioner are distributed for investors of Debretabor town that promoted by
Abay bank are fully collected .

Table 4.2.1 personal information of investor

Sex Male Female Total

No 21 3 24
respondent
Percentage 87.5 % 12.5 % 100 %
Age 18-30 31-40 41-49 50 and Total
above
No of 4 7 7 6 24
respondent
Percentage 16.6 % 29.5 % 29.5 % 25 100 %
Academic Illiterate certificate Diploma Degree Master PHD
qualification and Total
above
No of 0 3 4 15 2 24
respondent
Percentage 12.5 % 16.6 % 62.5 % 8.33 % 0 100
%
Marital status Married Un married Divorced Total
No of 22 32 0 24
respondent
Percentage 91.6 % 8.4 % 100 %

17
 Work Below one 1-5 years 6-10 years Above 10 Total
experience year years
No 2 12 8 2 24
respondent
Percentage 8.33 % 50 % 33.33 % 8.33 % 100 %
Source, questioner for investors in Debretabor town promoted by Abay bank in 2018

Item 1As indicated in above table among the total of 24 respondent 21(87.5%) were male and 3
(12.5%) were female , from this researchers conclude that most respondent are male.

Item 2,of the table indicated were age of respondent that include 16 % of the respondent were
found on the age of 18-30, 29.5 % were found on the age of 31-40, 29.5 % were found on the age
of 40-49 and 25 % of respondent were found on the age 50 and above, from this researchers
conclude that most of the respondent age were found on 18-30 and 40-49, this indicated most
investor were adult which means productive age group.

Item 3,of the above table shows academic qualification included, 12.5% were certeficat,16.6%
were diploma, 62.5% were degree, and 8.33%,were master, this indicated that most respondent
were educated personal are participated in the investment activity .

Item 4,of the above table shows marital status included, 91.66% were married,8.33% were
unmarried, this indicated most respondent were married.

Item 5,of the above table shows work experience included 8.33% were below one year,50% were
1-5 year,33% were 6-10,and 8,33% were above 10 year, this indicates that the majority of
respondent were participated at recent time.

Table 4. 2.2 Abay bank promote privet investors

Question Description Frequency Percentage

1 .How does Abay A .Credit extension 10 41.6%
bank promote privet B .Financial and 2 8.2%
investment in investment advice
Debretabor town by C .Encourage small 12 50%
means of: and medium scale
industries
D If other……… - -
Total 24 100%
Source , questioner for investor in Debretabor town that promoted by Abay bank in 2018.

According to the information observed in the above table how does the bank promote privet
investment in Debretabor town included, 41.6% of respondent choose credit extension, 8.2%
were choose financial and investment advice and 50% of respondent choose encouragement of
small and medium scale industry as source of finance, based on the response the researcher

18
conclude that investors obtained more service by means of encouragement of small and medium
scale industry.

Table 4.2.3 way of Abay bank to promot investors.

Question Description Frequency Percentage

2 .From the above Yes 21 87.5%
question number
one ,were the way of
Abay bank to promote No 3 12.5%
private investor is
good ? Total 24 100%
Source, questioner for investors In Debretabor town that promoted by Abay bank in 2018.

As indicated in the above table 87.5% of respondent were chose yes and 12.5% of respondent
choose no, from this researchers concluded that the way of Abay bank to promote privet investor
were good.

4.2.4 Investment activity

Question Description Frequency Percentage

3 .Which investment From agricultural
activity performed in sector
Debretabor that A .Irrigation 14 58.4%
promoted by B .Cattle breeding 8 33.3%
Abaybank ? C .Forestry 2 8.3%
D .If other………
Total 24 100%
From industrial
sector
A .Manufacturing 4 16.7%
B .Construction 18 75%
C .Merchandise 2 8.3%
D .If other……
Total 24 100%
From service sector
A .Hotel 20 83.3%
B .Transport and 16.7%
communication 4
C .Hospital
D .If other……
Total 24 100%
Sources, questioner for investor in Debretabor town that promoted by Abay bank in 2018.

According to the response obtained on the above table out of 24 respondent, from agricultural
sector 58.4% of them were choose irrigation , 33.3% of them were choose cattle breeding and

19
8.3% of them were choose forestry, from industrial sector 16.7% of them were choose
manufacturing ,75% of them were choose construction, 8.2% of them were choose merchandise
and from service sector 83.3% of them were choose hotel, 16.7% of them were choose that the
major activities performed in Debretabor town, from this major activities were performed in the
town that investors focused on, from agricultural sector on irrigation 58.4% , from industrial
sector on construction 75% and from service sector on hotel 83.3% ,researchers concluded that
major activities were focused on industrial and service sector.

4 .2.5 The current investment condition

Questioner Description Frequency Percentage

4 .From the above A .At higher stage 2 8.3%
question no 3 what is
the investment B .At growth stage 14 58.4%
condition of
Debretabor town in C .At infant (low) 8 33.3%
current period by stage
considering their Total 24 100%
capital flow ?
Sources, questioner for investor in Debretabor town that promoted by Abay bank in 2018.

As indicated in the above table shows out of total respondent , 8.3%were choose at higher stage
that current condition of investment at current period, 33.3% them were choose at growth stage,
from this the researcher concluded that the investment condition of Debretabor town were lies at
growth stage.

4.2.6 Special service of the bank

Question Description Frequency Percentage

5 .Does the bank give Yes 21 87.5%
special service than
other bank means,
other than lending and
investment advice ? No 3 12.5%

Source, questioner for investor in Debretabor town that promoted by Abay bank in 2018.

Regarding the above information out of the total respondent, 87.5% of the respondents were
choose yes and 12.5% of the respondents were choose no, from this the researchers concluded
that the respondent by consider the bank give service from Monday up to Saturday morning 8:00
PM up to 9:00 PM at night as a special service than other banks they choose yes.

4.2.7 challenge of investment

Question Description Frequency Percentage

20
 6 .Is there any Yes 22 91.7%
challenge for growth
of investment ? No 2 8.3%
Source, questioner for investors of Debretabor that promoted by Abay bank in 2018.

According to the information obtained on the above table due to the existences of inflation,
unstable peace and security of the country and other factor, from the total of respondent, 91.7%
were choose yes and 8.3% no.

4.3 Analysis of interview

Result of Interviews from managers of Abay bank

According to the result of interview the bank promote private investors by giving, credit
extension, investment and financial advice and before investment activity the bank appraisal
study about the project advice the new entrant about the nature ofthe project its economical
advantage with related other project and its current demand and supply also the bank technical
service for employees of the project without payment. During investment activity gives
counseling and technical service such as costing methods, managing finance and controlling risk
and soon. During explanation of the project it gives service such as either to continue with
present project or change to other related profitable project and the bank promote private
investors have linkage between government and investment commission.

Interview for Debretabor investment commission

Based on the finding of interview from manager the major investment activity performed in
Debre tabor town are transportation and communication, service, construction and tourism. And
as managers response Abay bank gives technical and financial service. Investors both wealthy
and moderate ask the investment commission to give license of them for the above listed
investment activities. The manager describes investors’ capacity and interest in economic sector
such as construction and service sectors, because of excess labor input and higher customers
respectively. The manager classified the investment related problem in Debretabor town such as
from government regulation side, from investors’ side and from financial institution side. From
government side like inflation, peace and security of the country, road, network, light etc. From
investors side expand their project without additional license disturb the community and chats
the commission by separating license ownership, From financial institution side problem like
does not give the loan in the appropriate period, quick repayment period of loan were the most.

21
 CHAPTER FIVE
CONCLUSION AND RECOMMENATION

5. INTRODUTION
In this section attempt was made to summarized the major finding of the study focusing the role
of Abay bank in Debretabor branch to promoting private investment, finally recommendation
forwarded for those problems identified.

5.1 conclusion
on the base of interview questioner and self reviews data organized from assessing this study
come up with in the following conclusion.
22
  Investment activities in Debretabor town including service sector, industrial sector, and
agriculture sector. Investors on each sector that did not give equal attention to perform.
Because based on information gathered from employees of the bank, investors,
investment commission and managers of Abay bank, investors give a great attention
from service sector on hotel and from industrial sector on construction. Abay bank play
great role by providing credit extension, encourage medium and small scale industry as
source of finance and investment advice to promote private investors. The bank had
smooth relation with clients and customers.
 Investment condition of Debre tabor town in the current period is found at infant (low)
stage ,because in the investment activates they had related problems that did not growth
at fast, such problems like inflation, peace and security of the country, quick repayment
of loan etc.
 Abay bank played a great role of the economic development in Debretabor town. Its
activities done by the bank includes extension of credit, financial investment, counseling
and technical service, and promotion of small and medium scale industry.
 The bank disburse loan for private and cooperative area of investment. According to the
information gathered, the bank highly accomplished on hotel from service sector and on
construction from industrial sector. The rest is slightly accomplished as compared with
hotel and construction sector.

5.2 recommendations
Private investment promotion by private Abay bank increase the computation of investment this
cause increase the wealth of nation which improve living standard of the society. So Abay bank
in Debre tabor branch have to take the following action to promote private investment and also
investment commission take part to promote investment.

 Investment commission advice investors to participate in other economic sub-sectors, so

the commission could advice investors to get loan from Abay bank in their own interest
rate and long period of repayment.
 The bank focus on giving lending, counseling and technical service. It is not enough, so
the bank could prepare annual meeting after conducting research with investors to
announce them about profitable and risk project, supply and demand condition of product
or service of each project, and new policy and strategy of investors.

23
  The bank cerate linkage with investment commission to know investors willingness to
invest and their investment related problem using investment commission as
intermediaries between investor and the bank.
 Before investment activity, the bank made appraisal study about the project advice nature
of the project, its economical advantage and current demand and supply of the society.
During investment activities the bank give counseling and technical service.

Reference
 Ahmed Ibrahim, (1990),Journal economy of Malaysia.
 Alexander Laurin, (1998)
 Asad,M,(1997 ), areas of investment in Ethiopia.
 Cambeli,(1994), financial institution and capital market .
 Good heart-will co, inc (1996).
 Gurlew,etal,(2006).
 International financial and corporation (IFC),(1994), Annual report.
 International financial and corporation (IFC),(2002 ), Annual report volume 1.
 K,relly&A, Nortonal,(2004), capital investment 7th edition.
 Louis T,well& Alvin, G wint (Washington Dc,IFC,(2000) marketing country promotion
as a tool for attracting foreign investment.

24
  Mckinnon,(2007), as cited by Adeniyi ,(2006).
 Melake Yohannes,(2011), financial institution for investment.
 Mesnbet Shenkute,Augest 17,(2015), co - founder and president of Abay bank.
 Mugume,(2008), financial institution market.
 Tesfaneh Yared, (1993).
 World bank,(1993).

APPENDIX

TABOR DEBRE UNIVERSITY

FACULTY OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

This questionnaire is prepared to gather relevant data for the study entitled the role of financial
institution in promoting private investment in Debre tabor town in case of ABAY BANK.

25
You are kindly requested to give your genuine response for each of the forth coming questions so
that will be in opposition to draw conclusion and recommendation accordingly. More ever the
output of the study may be used by policy maker as an input.

Additionally, I promise the confidentiality of the data you are going to proceed. i.e. not release
to any third party without your permission and notice.

INSTRACTION

1. Dear respondent you are not required to write your name to give you freedom, to respond
confidently and to keep our secret safely.

2. Please put mark ( ü) in the place provide for you in box for open and close questions.
THANKU INADVANCE FOR YOUR COOPERATION.

Part I: Personal information

1) Sex Male Female

2) Age 18-30 31-39

40-49 50 and above

3 Your academic qualification

Elementary High school Certificate

Degree

Diploma

Master o PHD and above o

4. Indicate your work experience in the banking industry

A) Less than 1 year B) 6-10 year

C) 1-5 year D) over 10 year

5. Your job status (specific responsibility)

26
A) Casher B) economist (planner)

C) Loan officer (credit team) D) senior officer E) other specify----------------

Part two: ü Bank service related questions for employees of ABAY BANK

1. How does Abay bank promote private investment in Debre tabor town by means of ;-

A. Credit extension
. B. Financial and investment advice

C. Encourage medium and small scale industries by means of as source of finance

D. If other……………….

2. Is it those way of Abay bank to promote private investment is good which included in
question no 1 ?

Yes o No o

3. If your answer is “no” why the way is not good?

b/c………………………………………………
……………………………………………………............................................................................
..............

4. Which investment activities performed in Debre tabor town that promoted by Abay bank ,

From agricultheral sector , A .Irrigation B. Cattle breeding

C. Forestry D. If other………..

From industrial sector, A. Manufacturing B. Construction

C. Merchandise D. If other………..

From service sector, A. Hotel B. Transportation and communication

C. Hospital D. If other……………

27
5. If you select from above question no 4 what is the investment condition of Debretabor town in
current period by considering their capital flow. A at higher stage B. at growth stage C at
infant ( low) stage

6. Is there any change existed from the past in investor’s participated area?

Yes No

7.If you say “yes” fore question no 3write the change

---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------

8. Does the bank give special investment service than other banks means, other than lending and
investment advice ?

Yes No

9.if you say’ yes’ explain the service provided by the bank
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------

10.Is there any challenge for growth of investment?

Yes o No o

11.If you say “Yes” explain the

challenge………………………………………………………………….

……………………………………………………………………………………………………
……………………………………………………………………………………………………
………

Interview for manager of ABAY BANK IN DEBRE TABOR BRANCH

1. How does ABAY BANK promote investment?

28
2. Does the bank have relation with any other party to promote investment?

DEBRE TABORE UNIVERSITY

FACULTY OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

This questionnaire is prepared to gather relevant data for the study entitled the role of financial
institution in promoting private investment in Debre tabor in case of Abay Bank.

You are kindly requested to give your genuine response for each of the forth coming questions so
that will be in opposition to draw conclusion and recommendation accordingly. More ever the
output of the study may be used by policy maker as an input.

Additionally, I promise the confidentiality of the data you are going to proceed. I.e. not release
to any third party without your permission and notice.

INSTRACTION

1. Dear respondent you are not required to write your name to give you freedom, to respond
confidently and to keep our secret safely.

THANK INADVANCE FOR YOUR COOPERATION.

Interview for Debre tabor investment commission.

1. What are the major investments activates performed in Debre tabor town?

2. Is there other contribution of ABAY Bank other than lending credit?

29
3. Does the resource availability of the zone can much with investor’s capability and interest to
invest?

4. Is there investment related problems in Debre tabor town?

ደብረታቦርዩንቨርስቲ

ቢዝነስናኢኮኖሚክስ

አካዉንቲንግ ና ፋይናንስ ትምርትክፍል

ውድተሳታፊዎቻችንይህመጠይቅየተዘጋጀውበደ/
ታቦርከተማለምትገኙየመዋለነዋይአፍሳሽባለሀብቶችሲሆንየጥናቱመካሄድበእርስዎላይምንምአይነትችግርየለ
ም።እናምየእናንተንምላሽሚስጥርለመጠበቅታማኝነታችንየጎላነው።ስለዚህየተሰጠዎትንመጠይቅበተሰጠውየ
መልስመስጫውስጥበአግባቡበመሙላትይተባበሩን።ለምትስጡትምላሽከልብእናመሰግናለን።

ማሳሰቢያ

ስም መፃፍ አያስፈልግም፡-

መልስዎ ግልፅና የሚነበብ ይሁን፡-

ለተሰጡት አማራጮች የራይት ምልክት ይጠቀሙ

ክፍልአንድ

አጠቃላይ ግላዊ መጠይቅ

1.ፆታ፡- ወንድ o ሴት o

30
2. እድሜ:- 18-30 o 31-40 o 41-49 o 50 እና ከዚያ በላይ o

3. የትምህርትሁኔታ፡- ያልተማረ o የምስክር ወረቀት o ዲፕሎማ o ድግሪ o

ማስተር o ዶክተር o

4. የጋብቻ ሁኔታ፡- ያገባ(ች) o ያላገባ(ች ) o የፈታ( ች) o

5. በስራው ላይ ያለዎት የስራል ምድ፡- ሀ. ከ 1 አመትበታች ለ. ከ 1-5 አመት ሐ. ከ 6-10 አመት መ.

ከ 10 አመት በላይ

ክፍልሁለት

ከጥናቱ ጋር የተያያዙ ጥያቄዎች

1 አባይ ባንክ የግል መዋለነዋይ ፍሰትን(ኢንቨስትመንትን) ለማበረታታት የሚጠቀማቸው ዘዴዎች የትኞቹ

ናቸው?

ሀ. ብድርን በማስፍፍት ለ. ለትንንሽና መካከለኛ ኢንዱስትሪ የገንዘብ ምንጭ በመሆን ሐ. የገንዘብና

የምክር ድጋፍ በመስጠት

መ . ሌልካለ.....

2. እነኚህ ጥያቄ ቁጥር 1 የተጠቀማቸው ዘዴዎች ጥሩናቸው ብለው ያምናሉ?

ሀ አዎ ለ የለም

3.መልስዎ "የለም" ከሆነ ጥሩ ያልሆነበትን ምክንያት እባክዎ ይዘርዝሩ…………………………………

………………………………………………………………………………………………………
………

4 .ከሚከተሉት ውስጥ የትኛው የመዋለነዋይ(ኢንቨስትመንት ) እንቅስቃሴ ነውበደ/ታቦር ከተማበአባይ ባንክ

የሚበረታታው(የሚረዳው)?

ከግብርናውክፍል፡- ሀ .የመስናልማት ለ.የደንጥበቃናአያያዝሳይንስ

ሐ. የከብት እርባታመ. ሌላካለ......

ከኢንዱስትሪው ክፍል :- ሀ. አምራች ሐ . ህንፃስራ

31
ለ . መግዛት እና መሸጥመ. ሌላካለ.....

ከአገልግሎትክፍል፡- ሀ. ሆቴል ለ. መንገድና መገናኛ( ለመኪና)

ሐ. ሆስፒታልመ. ሌላምካለ......

5. ከጥያቄ ቁጥር 4 የትኛው የመዋለነዋይ (ኢንቨስትመንት) እንዳለተመረጡ በአሁኑ ስዓት የኢንቨስትመንት

ሁኔታው በደ/ታቦር ከተማ በመደራጀት ላይ ይገኛል ፥ ማለትም ኢንቨስት የምታደርጉትን ገንዘብ
በተመለከተ።

ሀ.ከፍተኛሐ.ዝቅተኛ

ለ.መካከለኛ

6. አባይ ባንክ ከሌሎች ባንኮች ጋር ሲነፃፀር ከብድርና ምክር አገልግሎት ውጭ የተለየ አገልግሎት ይሰጣል?

ሀ. አዎ ለ. የለም

7. ከጥያቄ ቁጥር 6 መልስዎ አዎ ከሆነ የተለዩ አገልግሎቶችን እባክዎ ይዘርዝሩ.......................................

............................................................................................................................................................
..............8. በመዋለነዋይ (ኢንቨስትመንት) እድገት ላይ መስናክሎች አሉ ብለው ያስባሉ ?

ሀ. አዎለ. የለም

9 .በጥያቄ ቁጥር 8 መልስዎ አዎ ከሆነ መሰናክል ናቸው ብለው የሚሉዐቸውን ነገሮችን ይዘርዝሩ።

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