The overall aim of this study was to assess what the existing share transfer mechanism in the private banking companies in the absence of secondary stock market in Ethiopia is, along with its related challenges and benefits.
The information was obtained from 12 purposively sampled private banking companies by adopting descriptive research design. Semi structured questionnaires were administered to 153 respondents from which 43 were all share department expertise and 110 were conveniently selected shareholders from those banks and interviews also administered for share department directors of those banks. The questionnaires covered the key aspects of what options are there to transfer shares in the absence of secondary stock market in Ethiopia and related challenges and benefits.
The main conclusions of the paper were: despite the absence of secondary stock market in Ethiopia shares can be transferred between investors through different ways includes by purchase through the help of share department employees of the companies, by descendant’s if the transfer is sequestration, and through court order at the time of debt settlement, divorce, death. Difficult to know market value of shares, less marketability, inaccessibility of information about share trade were the major challenges with the existing share transfer mechanism that existed in private banking companies in the absence of stock market in Ethiopia. Generally the findings suggest that shares of the private banking companies can transferred between investors in the absence of stock market in Ethiopia. Some recommendations were given from those the banks should open formal office to act as an agent for share transfer purpose for their shareholders by doing so the banks can enhance the transferability of shares.
Table of Contents
1. INTRODUCTION
1.1 Background of the study
1.2 Statement of the problem
1.3 Objectives of the study
1.3.1. General Objective
1.3.2 Specific Objectives
1.4 Research questions
1.5 scope of the study
1.6 Limitations of the study
1.7 Significance of the study
1.8 Organization of the paper
2. REVIEWS OF RELATED LITERATURE ON THE STUDY AREA
2.1 Theoretical Review Literature
2.1.1 Introduction to the financial system
2.1.2 The roles of Financial System in the Economy
2.1.3 The Financial Institutions and their roles in the Financial System
2.1.4 Financial market in the financial system
2.1.5 Types of financial markets
2.1.5.1 Debt versus equity market
2.1.5.2 Money market versus capital market
2.1.6 Stock market
2.1.6.1 Primary versus secondary stock market
2.7 Stock exchanges
2.2 EMPIRICAL REVIEWS
2.2.1 Overview of the global stock exchange markets
2.2.2. Overview of Stock Exchanges in Africa
2.2.2.1 Transferability of ownership right (shares) in Africa
2.2.3 Stock market and exchange in Ethiopia
3. RESEARCH DESIGN AND METHODS
Introduction
3.1 Research design
3.2 Population descriptions’
3.3 Sampling design and Sample size
3.4 Type and source of data
3.6 Data collection instrument
3.7 Data collection procedures
3.8 Method (Techniques) of data analysis
DATA PRESENTATION AND ANALYSIS
Introduction
4.1 Quantitative analysis of data’s
4.1.1 Response rate to the questionnaires
4.1.2 Back ground of the respondents
4.1.2.1 Educational qualification of the respondents
4.1.2.2 Professional certifications ‘and work experience of the banks employee
4.1.3 Means of transferring ownership rights (shares)
4.1.4 The roles of banking companies at the time of share transfer
4. 1.4.1 How to start the transfer of ownership rights
4.1.4.2 Determination of share price
4.1.4. 3. Do the banks issue share certificate immediately at the time of share transfer
4.1.4. General roles of the banking companies at the time of share transfer
4.1.5 Challenges with the existing share transfer mechanism
4.1.5 .1 Challenges with the existing share transfer mechanism as transferor (seller)
4.1.5 .2 Challenges with the existing share transfer mechanism as transferee (buyers)
4.1.6 Benefits with the existing share transfer mechanism
4.1.6.1 Benefits with the existing share transferring mechanism as a transferor (seller)
4.1.6 .2 Benefits with the existing share transferring mechanism as a transferee
4.1.7 Impact of non existence of secondary stock market on the transferability of shares
4.1.8 Data analysis that collected from share department employees of the banks only
4.1.8.1 Do the banking companies act as an agent at the time of share transfer?
4.1.8.2 Do the banking companies use other agent other than their share department employees for share transfer purpose?
4.1.8.3 Minimum denomination of share price in the banks
4.1.8.4 On average how many shareholders can transfer their ownership rights within a year bank?
4.2 Qualitative data analysis
4.2.1 Available options to transfer ownership right
4.2.2 Challenges and benefits with the existing share transfer mechanism
4.2.3 Effect of absence secondary stock market on transferability of shares
4.2.4 Suggestions given by the respondents for the banking companies via open ended questionnaires to improve shares transferability
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary of findings
5.2 Conclusions
5.3 Recommendations
REFERENCES
APPENDIXS
Objectives & Core Themes
The primary objective of this research is to evaluate the existing mechanisms for share transfer within private commercial banking companies in Ethiopia, given the current absence of a formal secondary stock market. The study aims to identify the methods currently utilized by shareholders to transfer ownership, assess the challenges faced by both buyers and sellers, and determine the role played by banking institutions in facilitating these transfers.
- Mechanisms for transferring ownership rights in the absence of a secondary stock market.
- Challenges encountered by transferors (sellers) and transferees (buyers) in the existing system.
- The specific roles of private commercial banks in the share transfer process.
- The impact of lacking a secondary stock market on share liquidity and marketability.
- Recommended improvements to enhance the efficiency and accessibility of share transfers.
Excerpt from the Book
4.1.3 Means of transferring ownership rights (shares)
This section presented and discussed about what options’ are there to transfer ownership rights in Ethiopia in the absence of secondary stock markets, and how the patterns of responses in relation to the frequent ways of transferring ownership right from the possible options were also discussed by taking evidence from PBC which operated in Ethiopia.
For this matter the respondents were asked to pick the possible means of transferring ownership rights or shares that may existed (used) in the absence of secondary stock market in their respective banking companies. Accordingly as shown in figure (1) on the next page out of 153(100%) total respondents to the questionnaires 59(38.56%) respondents, respond that ownership rights (shares) were transferred through share department employees of the banks, 35(22.88%) respondents respond that ownership rights (shares) were transferred by transferring to descendents or heir, 31(20.26%) respondents were respond that ownership rights (shares) were transferred through relatives and 28(18.30%) were respond that ownership rights (shares) were transferred by court orders from existing shareholders to new corporate investors or from existing owners to the new owners in their respective banking companies. From this anyone can understand that ownership right in private banking companies frequently transferred by purchase through the help of share department employees of the banks, followed by sequestration by transferring to descendent or heirs, transferring through relatives and friends and court orders.
As per this finding someone can understand that, despite the non- existence of secondary stock market in Ethiopia ownership rights (shares) can transferred in different ways or mechanism between investors.
Summary of Chapters
CHAPTER ONE: Provides an introduction to the financial system and the context of the study, specifically addressing the lack of a secondary stock market in Ethiopia and the research objectives.
CHAPTER TWO: Reviews theoretical and empirical literature concerning financial systems, stock markets, and the role of financial institutions in both global and African contexts, including the history of stock markets in Ethiopia.
CHAPTER THREE: Outlines the descriptive research design, methodology, data collection techniques, and sampling strategy involving twelve private banking companies.
CHAPTER FOUR: Presents the quantitative and qualitative analysis of collected survey and interview data regarding share transfer practices, challenges, and benefits within the banking sector.
CHAPTER FIVE: Summarizes the key findings, presents conclusions based on the research, and offers specific recommendations to enhance share transfer mechanisms in Ethiopia.
Keywords
Secondary stock market, Share, Transferability, Private banking companies, Financial system, Equity market, Ownership rights, Financial institutions, Liquidity, Marketability, Ethiopia, Banking sector, Share transfer mechanism, Investment, Capital markets.
Frequently Asked Questions
What is the core focus of this research?
This research evaluates how ownership rights (shares) are transferred in Ethiopian private commercial banks in the absence of a secondary stock market, analyzing the current challenges and benefits associated with this process.
What are the primary themes investigated in this work?
The work explores current share transfer methods, the role of banks as intermediaries, the barriers to liquidity, and the overall impact of lacking a regulated secondary market on investors.
What is the primary goal of the study?
The main objective is to assess the existing share transfer mechanisms used by private banking companies and to provide evidence-based recommendations to improve these processes for shareholders.
Which scientific methodology does the author use?
The author adopts a descriptive research design, utilizing a mix of quantitative analysis of survey data from shareholders and bank staff (SPSS) and qualitative analysis of interviews conducted with share department directors.
What does the main body of the work cover?
The main body reviews the theoretical foundations of financial markets, analyzes the current state of Ethiopian banking share transfers, and provides an empirical presentation and discussion of the survey results regarding transfer challenges, price determination, and bank roles.
Which keywords define this work?
Key terms include Secondary stock market, Share, Transferability, Private banking companies, Financial system, and Liquidity.
How does the absence of a secondary stock market affect the banks?
The study concludes that the absence of a secondary market forces banks to manage share transfers internally, which often results in illiquidity, difficulty in determining true market value, and inaccessible information for investors.
What specific suggestion is provided for banks to improve transferability?
The researcher suggests that banks should open formal offices dedicated to share transfers, act as formal agents for their shareholders, and provide better information systems to streamline the trading process.
- Quote paper
- Bahiru Gebeyehu (Author), 2020, Existing Share Transfer Mechanism in Ethiopia. Challenges and Benefits, Munich, GRIN Verlag, https://www.grin.com/document/947670
