Justification of the Project

This urbanization implies large concentration of peoples with greater demand for commercial activities. There is relatively greater demand for manufactured products, food items and services in urban areas. Hence it paves ways for the development and specialization of commercial activities (distribution, type and structure) in urban areas. It helps greater specialization in the type of product traded and services provided (Shahbaz, M., Bhattacharya, M., and Mahalik, M., 2015).

With greater urbanization, commercial activities like, shops bars and restaurants, hotels have become main source of livelihood for urban dwellers. Similarly, in Ethiopia the development of service sectors hotels, motels; small business activities become increasingly important to meet the growing demand of urban population.However, unless properly planned and identified, the distribution, establishment and size of the activities will result unplanned urban settlement around the area the activity is conducted. It will also result large informal sector concentration.

Urban centers are also areas where developments of financial institutions play a great role in economic development of urban economy. Financialactivities have potential relationship with small and medium enterprises through provision of loan and information on the allocation of financial resources. It can also influence behavior of the consumer through financial products they offer (DIEGMBH, 1997). Despite the short history ofthe development of commercial banks and microfinance companies in Ethiopia, it promotes saving and investment, creates employment opportunities for the alarming urban population, and facilitate international and local transactions. According to United Nation Human Settlement Program (n.d), financial institutions assist to improve efficiency and effectiveness, accessibility and sustainability of existing financial system. However, evidences showed that there exists high level of informal financial sectors. Especially, the use of remittance inflow and the mechanism of inflow highly matters in financial access and provision of quality service.Therefore, analyzing the functioning of financial sector will contribute in urban development process.