Ethiopia is set to establish a Secondary Capital Market for local currency and Treasury bills in about a year. … In secondary capital markets, existing securities are sold and bought among investors or traders, usually on a stock exchange (SE), over-the-counter (OTC), or elsewhere.
Is there secondary market in Ethiopia?
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.
Does Ethiopia Need secondary financial market?
Despite the aforementioned significances, there are no secondary securities markets in Ethiopia. Thus, one of the key institutions missing in Ethiopia is the Ethiopian Securities Market.
What is a secondary marketplace?
This is the market where securities are traded. Investors trade securities without the involvement of the issuing companies. Investors buy and sell securities among themselves. The secondary market does not provide financing to issuing companies –they are not involved in the transaction.
What is the major benefit of the secondary market?
The secondary market is the place where investors can buy or sell parts of loans from and to other investors on the platform. The main advantage of this kind of trade is that it gives investors the opportunity to liquidate their investments.
What are challenges for secondary market in Ethiopia?
Researchers raised absence of an organized capital market; state dominance of ownership; inadequate shareholder protection in laws; non-competitive market structure etc are considered as the main challenges or hindrances for the development of good corporate governance practices in Ethiopia post 1974 epochs and most of …
What are the major financial institution in Ethiopia?
Currently, the Ethiopian financial sector consists of 3 public banks1 including the Development Bank of Ethiopia (DBE), 16 private banks, 14 private insurance companies, 1 public insurance company, 31 microfinance institutions and over 8200 Saving and Credit Cooperatives (SACCOs) in both rural and urban areas.
Is there stock market in Ethiopia?
Does a stock market exist in Ethiopia? Ethiopia had a share dealing group called the “Addis Ababa Share Dealing Group” during the imperial era. … Since then an Ethiopian stock market has not been allowed to exist as a formal institution, and there are only unregulated and fragmented dealer markets.
Is there money market in Ethiopia?
Ethiopia had a securities market in the 1960s and 70s. The market was closed because of change of policy in 1974. The country does not have a securities market currently. It has created only an agricultural commodity market which is owned fully by the government and operated outside the financial market.
What is the structure of financial markets?
Financial markets comprise five key components: the debt market, the equity market, the foreign-exchange market, the mortgage market, and the derivative market.
What is secondary market in simple words?
Definition: This is the market wherein the trading of securities is done. Secondary market consists of both equity as well as debt markets. … Equity shares, bonds, preference shares, treasury bills, debentures, etc. are some of the key products available in a secondary market.
What is the difference between primary market and secondary?
The primary market is where securities are created, while the secondary market is where those securities are traded by investors. In the primary market, companies sell new stocks and bonds to the public for the first time, such as with an initial public offering (IPO).
Why do we need a secondary market?
In secondary markets, investors exchange with each other rather than with the issuing entity. Moreover, secondary markets create additional economic value by allowing more beneficial transactions to occur and create a fair value of an asset. …
What are the two types of secondary market?
Secondary markets are primarily of two types – Stock exchanges and over-the-counter markets.
What are disadvantages of secondary market?
Disadvantages of Secondary Markets
Price fluctuations are very high in secondary markets, which can lead to a sudden loss. Trading through secondary markets can be very time consuming as investors are required to complete some formalities. Sometimes, government policies can also act as a hindrance in secondary markets.
What are the functions of secondary market?
Some of the Important Functions of Stock Exchange/Secondary Market are listed below:
- Economic Barometer: …
- Pricing of Securities: …
- Safety of Transactions: …
- Contributes to Economic Growth: …
- Spreading of Equity Cult: …
- Providing Scope for Speculation: …
- Liquidity: …
- Better Allocation of Capital: