This is an individual assignment and carries 50% of the module mark (word limit: 2000 words). It covers the following learning outcomes for the unit: 2 Demonstrate an in-depth understanding….
Banking Control Law in Saudi Arabia, Lacks and development
International Monetary Fund & The World Bank Experts – Commercial bank perspectives
– The discussions focus on the background of these requirements as standards for all development country a member of the International monetary fund. No specific reasons to ask SAMA to change the Banking control law, but they report the needed to develop the environment of the regulation for the central bank in Saudi Arabia. It was very difficult to answer the questions to what extent SAMA should be dependent or not? However, there are more than aspects should be on the law to allow SAMA practising their authorities without interference from outside. Perhaps the SAMA working very well in banking sector in Saudi Arabia and they keep them away of the risk and financial crisis, but SAMA doesn’t deal well with some issues such as foreign investment and corporate governance. These lacks on SAMA regulations impact on the investment environment, because the Saudi government contributes on the banking market and they own shares on most of the Saudi Banks. Therefore, SAMA doesn’t protect the banks from this conflict of interests when the government sharing on decision making on the banking sector and a regulator at the same time. The main issues raised on these interviews were the conflict of interest, the market monopoly, and the issue of lost opportunities on the banking market on Saudi Arabia.
– The conflict of interests on banking sector of Saudi Arabia
Under this title should be addressed what’s that mean on banking sector and how this effect on the market, and what’s the risk on the future. Then will discuss the issue on Saudi Arabia , as mansion above the government their own shares on most some commercial banks and at the same time it is a regulator by controlling SAMA as a central bank when practising their authorities via Banking Control Law 1966. In addition it will be more clear if compare this issue with some countries such as the Bank of England, and Canada or the United States of America. It will be worth for the research if use some theory related to this issue. In addition, it will be important to connect this issue with chapter 1 and 2, and show how this development on banking control law will avoid this conflict to be fair for all banks and foreign investment in Saudi Arabia.
– The banking Market monopoly & kill the competition
Under this title should be discuss how this issue influence on the banking market the on the economy of the country. This issue existed on Saudi Arabia for the same reasons mentioned above, when the government doesn’t deal smoothly with the licencing for new banks on the market, at the same time they safe the exists banks and doesn’t open the competitions for the local or foreign investment to access on Saudi market. How these reasons made the international entities ask SAMA to develop their laws on banking supervision and change the BCL 1966. It’s important to justify how and why these arguments involve on the research chain. In addition, to clarify how and why this issue influence on the banking sector as a special case then by default on economy of the country. However, the issues on chapter 1 and 2 will be related to these issues.
– Lost opportunities for the exists commercial banks
Under this title should cover the issue of the exaggerating hedge of the potential risks may face the banks when lending the local investment or foreign investment as well doing their business on Saudi Arabia. The last decades reports indicates to Saudi banks sharing with each other to provide the financial project for the local customer but via outside broker such as HSBC, and City Bank. These processes of the lone Imposed a frustrating reality of the banking industry in Saudi Arabia, so they lost the opportunities to containment the local market, at the same time the investor paid for the loss of confidence in the strength of local banks. It will be worth for the research to state how the west banks such as HSBC and City Bank their business in the Gulf area and specially Saudi Arabia to prove this argument on the research.
It’s important on the discussion at the end of each topic address how the Bank of England deals with this issues and how the Saudi Arabian authority take the lessons to avoid these issues on the future.
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