Bank Merger Regulation and Enforcement in Ethiopia: The Need for Fitness or Wellness Approach

Abstract

The current trend of deregulation, liberalization, and privatization hastened the proliferation of banking sector mergers, even though the sensitiveness of the sector urges tight regulatory and enforcement institutions. This article aims at examining how existing Ethiopia's bank merger regulatory framework and enforcement institutions regulate and enforce bank merger proposals; both already executed bank mergers and imminent future proposals. The analysis employed a qualitative approach using primary and secondary data to assess the existing Ethiopian bank merger regulatory framework. The findings indicate that the existing bank merger regulatory framework and enforcement institutions suffer from various regulatory deficiencies. The substantive legal frameworks are: incomprehensive, haphazardly chopped in different legislations, and not capable of effectively dealing with complex bank merger issues. Likewise, the existing enforcement institutions lack: clearly defined guidelines on procedures, jurisdictional interaction, transparency, accountability, and cooperation platform. These pose a risk of regulatory uncertainty, parallel decisions, and jurisdictional conflict between the enforcement organs. Therefore, it is recommended to: reform the existing bank merger regulatory frameworks in line with internationally well-adopted principles; strengthen the existing enforcement institutions; define their jurisdictional interface; and develop a mutually initiated cooperation-platform among the regulatory organs as crucial for effective regulation of the regime.