Effective regulatory regimes: a comparative analysis of GCC financial regulators

Abstract

Purpose – The purpose of this study is to investigate the effects of the global financial crisis on Gulf Cooperation Council (GCC) bank regulation and the impact on the region and the policies adopted by the regulators to avoid financial panic and contagion. Design/methodology/approach – The author examines GCC countries’ financial soundness indicators in terms of capital adequacy, non-performing loans and provisioning rates, including central bank liquidity support, deposit guarantees, capital injections and monetary easing and policies to mitigate risk assessment, and the monitoring and elimination of practices promoting excessive risk. GCC compliance regimes through multinational organizations and the exposure of the region to cross-border financial linkages to test for financial soundness are assessed. Findings – Overall, results indicate that comprehensive regulatory oversight exists in the GCC in conformity with international standards, and Basel capital adequacy requirements, and that the GCC regulators have acted prudently to establish high coverage in all measures but that gaps exit concerning cross-border surveillance and a need for imposition of capital surcharges on banks deemed high systemic risk. The supervision of Islamic financial institutions and a lack of inter-GCC liquidity support mechanism for this segment are highlighted. Practical implications – The paper shows that the GCC regulators need to address cross-border surveillance, as local banks branch internationally and foreign banks operate in the region. Originality/value – The author is not aware of any similar work that compares the regulatory policies of the GCC.

Optimal regulation of banking system’s advanced credit risk management by unified computational representation of business processes across the entire banking system

“…The advanced credit risk approaches and practices in the banking systems have great demands worldwide (Miu & Ozdemir, 2017), especially in Saudi Arabia (Ramady, 2015). Therefore, banks are under pressure to offer innovative products to their customers to capture the demands and stimulate the economic growth while complying with regulators' constraints (Ramady, 2015;Sagraves & Connors, 2017;Scannella, 2013). Currently, A-IRB practices aren't fully auto-validated nor real-time monitored via the regulatory verification processes (Engelmann & Rauhmeier, 2014).…”

“…The regulatory reporting system in SAMA is still not optimum and needs a technology solution to standardise and integrate all the required regulatory information in a central platform (Kern, 2012;Ramady, 2015). The regulatory reporting issues summarised in incomplete information "Asymmetric information", long analysis and validation process, delay in action and intervention, manual process coordination and others.…”

Banking Regulation and Financial Soundness Nexus in View of the Crisis: An Islamic Banking Perspective

“…The findings are presented in tabular and graphical form to enhance clarity. Following the studies of(Mohd Noor et al, 2020; Nosheen and Abdul Rashid, 2021;Ramady, 2015), the main indicators used to assess the resilience of banks are considered. Table1explains the main indicators GDPG, ROA, CAR and NPF.…”