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Article
Publication date: 9 February 2015

Mohamed Aly Ramady

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…

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.

Details

Journal of Financial Regulation and Compliance, vol. 23 no. 1
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 28 August 2009

Mohamed A. Ramady

The purpose of this paper is to analyze the effectiveness of the Saudi Arabian Monetary Agency's (SAMA's) regulatory policies.

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Abstract

Purpose

The purpose of this paper is to analyze the effectiveness of the Saudi Arabian Monetary Agency's (SAMA's) regulatory policies.

Design/methodology/approach

Both descriptive and comparative analyses are used, especially in highlighting SAMA's monetary policies and approach during the 2008 world financial crises.

Findings

The analyzes revealed that SAMA has more than adequately met international regulatory supervision standards, but will face challenges in regulating the domestic Islamic banking sector, meeting the self‐imposed 2010 Gulf Cooperation Council (GCC) gulf monetary union under a fixed parity rate regime, developing cross border regulatory and supervisory skills, and suggests possible solutions.

Practical implications

The paper noted the role of SAMA in managing monetary policy under a fixed parity regime, its banking supervision policies, and the evolving nature of banking regulation in the face of globalization challenges, World Trade Organization (WTO) accession in 2006 and in coping with the 2008 global financial crises which could be a template for other GCC central banks. The paper highlighted the major elements and effectiveness of Saudi banking law and restrictions on Saudi banks in terms of capital adequacy, reserve requirements and financial services, and address issues such as the impact of new regulatory reforms by SAMA, and their effectiveness on monitoring and supervising Saudi banks.

Originality/value

The paper concludes that the effectiveness of SAMA's regulatory policies has withstood both domestic and international financial crises and that SAMA can play a powerful influence in the proposed GCC monetary union.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 2 no. 3
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 18 July 2011

Ruth Rios‐Morales, Mohamed Ramady and Louis Brennan

The purpose of this paper is to analyze the role of sovereign wealth funds (SWFs) in sustaining global economies. The subject of SWFs has increasingly garnered the…

Abstract

Purpose

The purpose of this paper is to analyze the role of sovereign wealth funds (SWFs) in sustaining global economies. The subject of SWFs has increasingly garnered the concerns of policymakers, market players and scholars for two main reasons: First, these funds represent the largest concentration of capital that the world has ever known, with the Arabian Gulf SWFs becoming increasingly important global players, especially during the most recent financial crises. Second, there is the dominant role of national governments in the management of these colossal funds. This paper assesses the contrasting perspectives on SWFs and analyzes the role they can play in sustaining the global economy by engaging in foreign direct investment.

Design/methodology/approach

Both descriptive analysis and comparative analysis are used.

Findings

SWFs are large and tend to be long‐term investors and have characteristics that are compatible with foreign direct investment (FDI). There is a role for them in sustaining the global economy via FDI. This analysis suggests that only 11 percent of SWFs' investment in FDI is needed in order to counteract the forecast decline of FDI. Initiatives such as the recently established Santiago principles can help to allay the concerns of host and investor nations. This paper concludes that SWFs should be welcomed by market players and policy makers as tools of economic growth.

Practical implications

Current trends indicate that SWFs are playing an important role as a source of foreign investment, and are also reducing the impact of liquidity pressures in the international banking system. The main driving force of their investing in the global market is in securing higher returns. However, there has been unease among Western countries that have concerns that governments could use SWFs to seize control of strategic companies in sensitive sectors, for their own purposes.

Originality/value

The paper assesses the potential contribution of SWFs to FDI and highlights aspects related to fostering a code of conduct that can allay concerns around areas such as transparency, and the extent to which restrictions should be imposed by host governments.

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Article
Publication date: 18 July 2011

Evangelos Tsoukatos and Yiannis Dimotikalis

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341

Abstract

Details

EuroMed Journal of Business, vol. 6 no. 2
Type: Research Article
ISSN: 1450-2194

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Book part
Publication date: 1 January 2008

Khaled Hussainey and Ali Al-Nodel

Purpose – This paper examines the extent to which Saudi listed companies report online information about their corporate governance practice in light of the guidance…

Abstract

Purpose – This paper examines the extent to which Saudi listed companies report online information about their corporate governance practice in light of the guidance issued by the Saudi Arabian Capital Market Authority (SACMA), thereafter.

Methodology – We adopted a content analysis approach, accordingly a corporate governance disclosure index is developed to analyse the content of every company's website.

Findings – We found that the majority of Saudi listed companies utilise the Internet to communicate some information about corporate governance to their stakeholders. We also found that the level of online reporting of corporate governance varies between sectors. In particular, the paper revealed that the banking sector has the highest level of corporate governance disclosure compared with other sectors. On the other side, companies in the industry and service sectors provide very little information about corporate governance on their websites. The results suggest that the nature of control over the sector, the involvement of government in the ownership and management of businesses and some social assumptions could have an impact on companies’ decision to disclose online information about their corporate governance in developing countries.

Practical implications – The importance of investigating online reporting of corporate governance in Saudi Arabia emerges from the fact that SACMA published a guidance in 2006 that recommends the disclosure of corporate governance information by Saudi listed companies. Therefore, it would be worthwhile informing SACMA about the extent of compliance with the guidance of corporate governance. This is essential taking into consideration two facts: first, the recent remarkable growth of the Saudi stock market which was accompanied by significant increase in the demand for additional information by stakeholders; second, the recent increase of the utilisation of the Internet by companies for disclosure purposes worldwide. Further, the results of this research study could add to our limited knowledge about the practice of corporate governance in developing countries.

Originality/value – This paper contributes to the limited literature on disclosure practices in developing countries in general and in Saudi Arabia in particular. Our review of the literature revealed that there is no study to date on online disclosure of corporate governance in Saudi Arabia and very limited research has been carried out in developing countries in general. This is important taking into consideration environmental factors of developing countries, which could bring different sight in the issue of the disclosure of corporate governance.

Details

Corporate Governance in Less Developed and Emerging Economies
Type: Book
ISBN: 978-1-84855-252-4

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Article
Publication date: 7 December 2020

Ahmed Shaalan, Marwa Tourky, Bradley R. Barnes, Chanaka Jayawardhena and Ibrahim Elshaer

This study aims to examine the Arab practice of wasta (personal networks) and its potential interface with relationship marketing to enable firms to optimize their…

Abstract

Purpose

This study aims to examine the Arab practice of wasta (personal networks) and its potential interface with relationship marketing to enable firms to optimize their recruitment and retention of customers in societies where personal ties drive business relationships. It explores whether relationship marketing influences customer retention when a personal contact leaves.

Design/methodology/approach

Empirical data were gathered from 305 customers introduced to Egyptian small and medium-sized enterprises via wasta. Multiple-item scales were adopted, drawn from previous empirical studies. Quantitative analysis was used, including confirmatory factor analysis. Structural equation modeling was used to test the hypothesized relationships posited.

Findings

Wasta plays a significant role in attracting customers, nurturing early relationships and enhancing relationship quality, but does not influence the retention of customers. Practicing relationship marketing post wasta can enhance customer loyalty, even if the business was developed through the wasta contact who left to join a rival firm.

Research limitations/implications

Potential limitations arise from cultural differences in other Middle Eastern countries. Future studies could also validate the results in different sectors/industries and explore managers and employees’ perspectives.

Practical implications

Several recommendations emerge for managerial practitioners, including the use of wasta to attract business, but more significantly, the need for the effective use of relationship marketing to retain business. The study suggests that if relationship marketing is practiced well, customers are likely to remain loyal to the firm, even if the business was developed through a personal wasta relationship with an employee who subsequently moved to a competitor firm.

Originality/value

This study is the first to develop a unified model connecting the Eastern notion of wasta (personal ties) with relationship marketing. The study enhances the knowledge of wasta and relationship marketing. It is among the first to suggest that should employees with personal connections to customers leave to join a competing firm, there is still a strong likelihood that if relationship marketing is effectively practiced, then customers will remain loyal to the firm (rather than to the former employee).

Details

Journal of Business & Industrial Marketing, vol. 36 no. 10
Type: Research Article
ISSN: 0885-8624

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Article
Publication date: 13 August 2020

Arwa Al-Twal and Khaled Aladwan

This study aims to uncover graduating students’ standpoints on Wasta through exploring their motives to use it and its potential influences on them particularly when they…

Abstract

Purpose

This study aims to uncover graduating students’ standpoints on Wasta through exploring their motives to use it and its potential influences on them particularly when they move to a workplace (i.e. after leveraging it to gain employment).

Design/methodology/approach

Semi-structured interviews were conducted with 26 graduating students studying at a Jordanian private university.

Findings

Graduating students considered Wasta as a gateway to employment, which rationalised their motives to use it in terms of the perceived lack of equal opportunities in the market, and the absence of rules and regulations that inhibit it. However, they also perceived that being hired through Wasta could have positive and negative impacts on them.

Originality/value

The findings of the study enriched the understanding of various aspects of Wasta, such as why it is used, how it works and how it could have harmful effects on those who benefit from it in addition to those who do not have it, while previous literature primarily focussed on the latter. Although individuals may share similar contextual pressures that encourage them to use Wasta for employment purposes, this research shows that they would accept and justify its use for themselves, yet reject it for others. This study emphasises the need to conduct further research to explain these contradictory views. It also suggests exploring the motives of the patrons of Wasta and its influences on them when they offer it. This is to understand the psychology of offering Wasta and identify the roles of the parties who get involved in it.

Details

International Journal of Organizational Analysis, vol. 29 no. 3
Type: Research Article
ISSN: 1934-8835

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Article
Publication date: 17 August 2020

Fadi Alsarhan and Marc Valax

This paper aims to offer a review of the concept of wasta, as a form of social capital in Arab societies. Furthermore, this paper seeks to elucidate the main implications…

Abstract

Purpose

This paper aims to offer a review of the concept of wasta, as a form of social capital in Arab societies. Furthermore, this paper seeks to elucidate the main implications of the use of wasta among human resource management (HRM) practices on the workplace environment and the overall performance of institutions.

Design/methodology/approach

The authors embraced a qualitative approach in this paper. A total of 27 semi-structured interviews were conducted with HR officials from different levels in a number of Jordanian public organizations.

Findings

The results obtained indicate that wasta has negative consequences on the overall performance of organizations, through the influence it exerts on employee motivation, morale and job satisfaction, frustration, workplace diversity, turnover, brain drain, as well as its effect on the image and reputation of the individuals and organizations alike.

Originality/value

In this paper, the authors attempted to illustrate the concept of wasta as a form of social capital and to analyze its links with the features of the Jordanian culture through two of Hofstede’s dimensions. Furthermore, this paper is based both on the available literature and on data obtained through the semi-structured interviews. The findings through this process not only corroborate what we already know in the literature but they also generate an understanding of the hidden mechanisms that link the different implications of wasta together, creating the actual known consequences of this practice.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 14 no. 1
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 10 December 2018

Hussain Albin Shaikh, Sharon Purchase and Gregory Brush

The purpose of this study is to understand the development of social capital in an Arab business environment, and provide an in-depth description of the nature and role of…

Abstract

Purpose

The purpose of this study is to understand the development of social capital in an Arab business environment, and provide an in-depth description of the nature and role of three key Arabic business relationship characteristics (ehsan, et-moone and wasta), their impact on each other and key influencing factors.

Design/methodology/approach

A qualitative research design was used, in which face-to-face semi-structured interviews were conducted with innovation teams (22 team members) at six industrial small and medium-sized enterprises in Saudi Arabia. The interviews were recorded and transcribed, then analyzed (thematic coding) through NVivo.

Findings

The findings suggest that wasta, ehsan and et-moone align closely with the three social capital dimensions (structural, cognitive and relational); thus, developing these three relationship characteristics most likely results in developing social capital. The findings also expand the description of the three business relationship characteristics. Moreover, ehsan, et-moone and wasta appear to influence each other, and are affected by other factors such as an individual’s age and position, and the duration of the relationship. Ehsan has a positive influence on the development of et-moone, while the existence of et-moone appears to be necessary for the establishment of wasta-capital. A high level of ehsan might influence the relationship between et-moone and wasta-use and limit the negative usage of wasta.

Practical implications

International managers can improve the level of ehsan in their organizational and business relationships through assigning incentives and playing the role of moral champion to encourage ehsan behavior. Managers aiming to increase et-moone may choose team members with a high level of ehsan, emphasizing the development of personal relationships, and providing opportunities for socialization both inside and outside the workplace. A high level of ehsan and et-moone will assist managers to develop and use wasta.

Originality/value

This study makes a threefold contribution to the literature. First, it provides an expanded description of the three Arabic business relationship characteristics and how they align closely with the dimensions of social capital. Wasta aligns with the structural dimension and ehsan aligns with the cognitive dimension, while et-moone aligns closely with the relational dimension. Second, it suggests and shows how the three relationship characteristics might interact with each other. Ehsan appears to influence et-moone, and also the relationship between et-moone and wasta. Et-moone appears to have a positive influence on wasta use. Third, the findings also indicate that there might be other factors (e.g. age and position) that influence the interactions between the three business relationship characteristics.

Details

Journal of Business & Industrial Marketing, vol. 34 no. 2
Type: Research Article
ISSN: 0885-8624

Keywords

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