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Oil Price and Banking Sectors in Gulf Cooperation Council Economies before and after the Global Financial Turmoil: Descriptive Analysis

Author

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  • Abdulazeez Y.H. Saif-Alyousfi

    (Department of Finance, School of Economics, Finance and Banking, College of Business, Universiti Utara Malaysia, Sintok, Kedah, Malaysia)

  • Rohani Md-Rus

    (Department of Finance, School of Economics, Finance and Banking, College of Business, Universiti Utara Malaysia, Sintok, Kedah, Malaysia)

  • Kamarun Nisham Taufil Mohd

    (Department of Finance, School of Economics, Finance and Banking, College of Business, Universiti Utara Malaysia, Sintok, Kedah, Malaysia)

Abstract

In this paper, we analyze the evolution of the banking sector in the six GCC countries including concentration, trends in credit growth, balance sheets, and financial safety as well as oil price over the period 2000-2014. In general, our analysis finds that the level of capitalization of banks in GCC countries appears comfortable despite the adverse effect of the financial crisis. Despite apparent financial soundness, there are certain weaknesses in the banking sector of GCC countries which needs investigation. Firstly, GCC countries have registered sharp growth in of credit in consonance with the steady rise in the price of oil straining the liquidity position of banks. Secondly, some banking systems in GCC countries are highly exposed to households secured by their salaries especially in Bahrain (50 to 60%) and Qatar 70%). Thirdly, although the overall NPLs ratio in the GCC banking sector is at historically low levels, however, it has remained high when compared to the average NPLs ratio of the global banks. Finally, we find that banks in GCC countries seem to keep low levels of liquidity compared to international standards.

Suggested Citation

  • Abdulazeez Y.H. Saif-Alyousfi & Rohani Md-Rus & Kamarun Nisham Taufil Mohd, 2018. "Oil Price and Banking Sectors in Gulf Cooperation Council Economies before and after the Global Financial Turmoil: Descriptive Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 8(6), pages 89-101.
    • Handle: RePEc:eco:journ2:2018-06-12
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    Cited by:

    1. Bassam Omar Ali Jaara, 2021. "Political Instability and Banks Performance in the Light of Arab Spring: Evidence From GCC Region," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(3), pages 284-299, May.
    2. Hani El-Chaarani, 2019. "The Impact of Oil Prices on Stocks Markets: New Evidence During and After the Arab Spring in Gulf Cooperation Council Economies," International Journal of Energy Economics and Policy, Econjournals, vol. 9(4), pages 214-223.
    3. Hani El-Chaarani, 2019. "The Impact of oil Prices on the Financial Performance of Banking Sector in Middle East Region," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 148-156.

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    More about this item

    Keywords

    Oil price; Banking sector; Credit growth; Financial statements; Financial soundness; Global Financial Crisis; GCC countries;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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