Banking policies and regulations: comparative study of Kuwait, UAE and Qatar

The major objectives of regulating the banks are to reduce the risk of failure and to achieve some desired social goals. Regulations are designed to prevent commercial banks from becoming too risky and to maintain public confidence in the country's financial system. The economic argument for such regulation is that banking, by its very nature, is prone to market failure. In recent years, the central monetary authorities of six GCC countries have made many regulatory changes in order to achieve certain social and economic goals. The monetary authorities of GCC countries have strengthened prudential norms. Asset classification and provisioning norms have moved closer to international standards. Banks are required to maintain capital to risk weighted assets ratios of at least 8% required by the BIS. Local banks use International Accounting Standards. Overall, the Central Monetary Authorities in these countries are very proactive in terms of supervising and monitoring their regulations on banking sectors.