Effective regulatory regimes: a comparative analysis of GCC financial regulators

Mohamed Aly Ramady (Department of Finance and Economics, King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia)

Journal of Financial Regulation and Compliance

ISSN: 1358-1988

Publication date: 9 February 2015

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.

Keywords

Acknowledgements

The author wishes to acknowledge the support granted by King Fahd University of Petroleum and Minerals Deanship of Scientific Research under project number IN 121032 in the preparation of this research.

Citation

Ramady, M.A. (2015), "Effective regulatory regimes: a comparative analysis of GCC financial regulators", Journal of Financial Regulation and Compliance, Vol. 23 No. 1, pp. 2-17. https://doi.org/10.1108/JFRC-09-2013-0032

Publisher

:

Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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