Abstract:
This study was conducted to examine foreign exchange risk management practices at
selected private banks in Ethiopia. The study used a descriptive research design. The
researcher used questionnaire to gather the primary data from the staffs of Awash bank,
Dashen bank and Abyssinia bank who are currently working at international banking
department, Finance department and Risk and compliance department. The study used
simple random sampling technique to distribute the questionnaires to the target population.
The researcher distributed 266 questionnaires and the analysis was made based on
241(90.60%) response rates. The result of the study showed that the greatest number of the
respondents agreed that the top managements of the selected private banks have played a
great role in foreign exchange risk management practice. Similarly, significant numbers of
respondents approved that the foreign exchange risk management policy and procedures
was practiced well. Moreover, the respondents had good level agreement on the internal
control system practice and management information system practice related to foreign
exchange risk management. Further, the study concludes lack of developing an effective
system of reporting to the board, lack of placing an acceptable level of internal control
system, improper follow upping, and lack of devoting necessary resources are identified as
the weak practices of foreign exchange risk management at selected private banks in
Ethiopia. Finally, among others the study recommended that the management of the selected
private banks have to assign dedicated work unit/personnel to acquire and keep any changes
on the foreign exchange risk management policies and procedures in a timely manner and
better to allocate the necessary resources to improve foreign exchange risk management
practices.
