Review Article
Market Landscape and Gap Analysis of Interest-Free Banking and Finance in Ethiopia
Abebe Tilahun Kassaye*
Issue:
Volume 12, Issue 4, August 2026
Pages:
84-88
Received:
27 August 2026
Accepted:
5 September 2026
Published:
20 September 2026
Abstract: Interest-free banking and finance (IFB) has evolved from a marginal regulatory accommodation into an increasingly significant segment of Ethiopia’s financial sector within little more than a decade. This paper presents a market landscape and gap analysis of Ethiopia’s IFB industry, examining its institutional evolution, market structure, regulatory architecture, growth trajectory, opportunities, and persistent structural challenges. Drawing on the National Bank of Ethiopia’s Financial Stability Reports, recent regulatory directives, institutional reports, and industry evidence, the analysis indicates that deposits under IFB services reached ETB 379.1 billion by June 2025, supported by nine fully fledged institutions and 48 window-based providers across the banking, microfinance, and insurance sectors. Despite this substantial expansion, significant gaps remain in capital-market depth, Sharia-compliant liquidity-management instruments, financing-to-deposit conversion, technological capacity, specialized human capital, product diversification, and Shariah governance. The evolving regulatory and financial-market environment, including Banking Business Proclamation No. 1360/2025 and the establishment of the Ethiopian Securities Exchange, presents opportunities for developing Sukuk, Takaful, and other innovative IFB products. The reviews suggest that IFB represents an underexploited pathway for enhancing financial inclusion, particularly among Ethiopia’s Muslim population. However, sustainable growth requires stronger regulatory parity, improved liquidity infrastructure, enhanced Shariah-compliant capital-market instruments, greater technological and human-resource capacity, and increased consumer awareness. Coordinated action among regulators, financial institutions, researchers, and industry stakeholders is therefore essential for developing a resilient, inclusive, and competitive IFB ecosystem in Ethiopia.
Abstract: Interest-free banking and finance (IFB) has evolved from a marginal regulatory accommodation into an increasingly significant segment of Ethiopia’s financial sector within little more than a decade. This paper presents a market landscape and gap analysis of Ethiopia’s IFB industry, examining its institutional evolution, market structure, regulatory...
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Research Article
The Effects of Bank Credit Risk and Liquidity on Bank Profitability in Sub-Saharan Africa: Evidence from a Dynamic Panel Model
Tesfaye Eresso Gofe*,
Amsalu Bedemo Beyene
Issue:
Volume 12, Issue 4, August 2026
Pages:
89-104
Received:
21 September 2026
Accepted:
4 October 2026
Published:
23 October 2026
DOI:
10.11648/j.ijfbr.20261204.12
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Abstract: In a highly competitive banking business environment of today, it is essential to maintain the bank's profitability to remain in the business and contribute towards a country's financial development. In this regard, this study tries to identify the role of banks' credit risk and liquidity status on their profitability. This study used a two-step GMM dynamic panel model to analyze the effects of bank credit risk and Liquidity on the profitability of banks using data obtained from 36 selected Sub-Sahara African countries from 2000 to 2020. The regression results prove the significant effect of risk and liquidity factors on banks' profitability. Specifically, bank credit risk adversely affects profitability, whereas liquidity affects the bank’s profitability positively. The control variables included in the model show mixed results, with trade openness indicating a significant adverse effect on profitability. Others, such as inflation, and financial openness, negatively affected banks' profitability. The implication of this study is that it is crucial for policymakers and bank managers to design effective credit risk management strategies to maintain bank profitability, stay competitive, and thereby contribute to the overall development of the financial sector in the study area.
Abstract: In a highly competitive banking business environment of today, it is essential to maintain the bank's profitability to remain in the business and contribute towards a country's financial development. In this regard, this study tries to identify the role of banks' credit risk and liquidity status on their profitability. This study used a two-step GM...
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