Ethiopia is recognized as the first African country to establish an independently owned central bank. This article evaluates the legal independence of the National Bank of Ethiopia (NBE), tracing its evolution from inception to the present day. Various studies provide robust evidence that an independent central bank is crucial for maintaining price stability without adversely affecting economic growth. The primary objective of this article is to analyze the extent to which the NBE maintains legal autonomy and effectively executes its monetary policy mandate amidst governmental influences. Utilizing contemporary metrics developed by Tobias Adrian, Ashraf Khan, and Lev Menand in 2024, the analysis is anchored in ten indicators of central bank independence, including institutional autonomy, policy-making authority, budgetary independence, and financial independence. A critical examination of the legislative frameworks governing the NBE assesses both existing laws and the proposed Draft National Bank Proclamation. Findings indicate that while the NBE has made significant strides in enhancing its legal independence, such as emphasizing price stability as its primary objective and allowing the board to set remuneration, substantial challenges remain. Persistent governmental control over appointments and financial resource allocation continues to undermine its operational effectiveness. This research underscores the necessity of a robust regulatory framework to enhance the NBE’s autonomy and promote economic stability and growth. By integrating historical insights with contemporary assessment metrics, this study advocates for targeted reforms that strengthen the NBE’s mandate in an increasingly complex economic landscape.
| Published in | International Journal of Finance and Banking Research (Volume 10, Issue 6) |
| DOI | 10.11648/j.ijfbr.20241006.13 |
| Page(s) | 126-138 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2024. Published by Science Publishing Group |
Central Bank Independence, National Bank of Ethiopia, Legal Independence, Measurement Metrics
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APA Style
Kiyar, H. A. (2024). Assessing Legal Independence of the National Bank of Ethiopia: An Analytical Framework Using Advanced Metrics. International Journal of Finance and Banking Research, 10(6), 126-138. https://doi.org/10.11648/j.ijfbr.20241006.13
ACS Style
Kiyar, H. A. Assessing Legal Independence of the National Bank of Ethiopia: An Analytical Framework Using Advanced Metrics. Int. J. Finance Bank. Res. 2024, 10(6), 126-138. doi: 10.11648/j.ijfbr.20241006.13
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Download@article{10.11648/j.ijfbr.20241006.13,
author = {Hamza Abdu Kiyar},
title = {Assessing Legal Independence of the National Bank of Ethiopia: An Analytical Framework Using Advanced Metrics
},
journal = {International Journal of Finance and Banking Research},
volume = {10},
number = {6},
pages = {126-138},
doi = {10.11648/j.ijfbr.20241006.13},
url = {https://doi.org/10.11648/j.ijfbr.20241006.13},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20241006.13},
abstract = {Ethiopia is recognized as the first African country to establish an independently owned central bank. This article evaluates the legal independence of the National Bank of Ethiopia (NBE), tracing its evolution from inception to the present day. Various studies provide robust evidence that an independent central bank is crucial for maintaining price stability without adversely affecting economic growth. The primary objective of this article is to analyze the extent to which the NBE maintains legal autonomy and effectively executes its monetary policy mandate amidst governmental influences. Utilizing contemporary metrics developed by Tobias Adrian, Ashraf Khan, and Lev Menand in 2024, the analysis is anchored in ten indicators of central bank independence, including institutional autonomy, policy-making authority, budgetary independence, and financial independence. A critical examination of the legislative frameworks governing the NBE assesses both existing laws and the proposed Draft National Bank Proclamation. Findings indicate that while the NBE has made significant strides in enhancing its legal independence, such as emphasizing price stability as its primary objective and allowing the board to set remuneration, substantial challenges remain. Persistent governmental control over appointments and financial resource allocation continues to undermine its operational effectiveness. This research underscores the necessity of a robust regulatory framework to enhance the NBE’s autonomy and promote economic stability and growth. By integrating historical insights with contemporary assessment metrics, this study advocates for targeted reforms that strengthen the NBE’s mandate in an increasingly complex economic landscape.
},
year = {2024}
}
TY - JOUR T1 - Assessing Legal Independence of the National Bank of Ethiopia: An Analytical Framework Using Advanced Metrics AU - Hamza Abdu Kiyar Y1 - 2024/12/23 PY - 2024 N1 - https://doi.org/10.11648/j.ijfbr.20241006.13 DO - 10.11648/j.ijfbr.20241006.13 T2 - International Journal of Finance and Banking Research JF - International Journal of Finance and Banking Research JO - International Journal of Finance and Banking Research SP - 126 EP - 138 PB - Science Publishing Group SN - 2472-2278 UR - https://doi.org/10.11648/j.ijfbr.20241006.13 AB - Ethiopia is recognized as the first African country to establish an independently owned central bank. This article evaluates the legal independence of the National Bank of Ethiopia (NBE), tracing its evolution from inception to the present day. Various studies provide robust evidence that an independent central bank is crucial for maintaining price stability without adversely affecting economic growth. The primary objective of this article is to analyze the extent to which the NBE maintains legal autonomy and effectively executes its monetary policy mandate amidst governmental influences. Utilizing contemporary metrics developed by Tobias Adrian, Ashraf Khan, and Lev Menand in 2024, the analysis is anchored in ten indicators of central bank independence, including institutional autonomy, policy-making authority, budgetary independence, and financial independence. A critical examination of the legislative frameworks governing the NBE assesses both existing laws and the proposed Draft National Bank Proclamation. Findings indicate that while the NBE has made significant strides in enhancing its legal independence, such as emphasizing price stability as its primary objective and allowing the board to set remuneration, substantial challenges remain. Persistent governmental control over appointments and financial resource allocation continues to undermine its operational effectiveness. This research underscores the necessity of a robust regulatory framework to enhance the NBE’s autonomy and promote economic stability and growth. By integrating historical insights with contemporary assessment metrics, this study advocates for targeted reforms that strengthen the NBE’s mandate in an increasingly complex economic landscape. VL - 10 IS - 6 ER -
Civil Justice Administration Directorate General, Ministry of Justice of the Federal Democratic Republic of Ethiopia, Addis Ababa, Ethiopia
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