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Firm credit and financial development: Evidence from the management practices across the universe of Ethiopian bank branches

Management practices and banking: The case of Ethiopia

Policy brief Firms and Trade

Authors

Francesco Strobbe

Researcher, World Bank

Nicola Limodio

Assistant Professor of Finance, Bocconi University
  • This study investigates whether management practices allow Ethiopian bank branches to improve their credit provision.
  • Researchers surveyed over 1,900 branches affiliated with 16 Ethiopian banks to score management practices across various dimensions and collect information on day-to-day operations.
  • Ethiopian bank branches that adopt stronger management practices issue loans with larger amounts, longer maturities, smaller collateral, and lower default rates.
  • There exists a positive relationship between management practices and the ability to serve more extensive geographic areas.
  • Private ownership and branch competition are associated with the adoption of better management practices.
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