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Arab Monetary System Ok
Arab Monetary System Ok
Table of Contents
Introduction......................................................................................................................................3
How Financial System works in Arab Countries.............................................................................4
Interest Rate Policy......................................................................................................................4
Monetary Credit Management.....................................................................................................5
Measures to Enhance Competition..............................................................................................6
Monetary Policy in Arab Countries.............................................................................................6
Capital development policies...........................................................................................................8
Stability of political environment....................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................11
market is held, directly or indirectly on the market-based financial sector policies, as well as the
development of monetary policy makers must be the same.
Moreover, the financial system are linked to the real economy naturally. Thus, the presence of a
strong financial sector policies to parental regulations and that is implemented by the new
supervisory agencies is necessary to ensure. In fact, as the financial sector in the Arab States in
what has been a key factor behind the improvement report recently parental rules and supervision
it is to strengthen the Arab Monetary Fund by supervisory institutions.
Positive real interest rates were maintained, on the contrary, the progress of reforms compared to
slow credit early. This increase in the reaction rate of growth for the development of financial
instruments and institutions welcomed calls by Arabs and Arab banks become more effective the
role of Central Bank liquidity provider is collected after a reduction as users. The above analysis
strongly suggested that as a result, an essential condition for successful reform programs in Arab
countries, positive real interest rates was the adoption of macroeconomic policies and careful.
The cost of money in a financial institution in the Arab financial liberalization program is
affected by complex ways. First, the removal of credits and control interest rate risks more
properly price allowed for banks. Because they usually add interest rate margins of control in
landing pre-reform period due to the very low set. Most of the Arab Bank loan portfolio of nontraditional threats, as well as prominent new borrowers to extend the second, in the period after
the reforms risk premium rose again. As competition in the credit markets slowly relative to the
overall pressure above the deposit markets increased in the third, was cast on the interest margin.
Monetary Credit Management
Almost all Arab financial officials recently have taken the steps to reducing administrative
restitutions. The proportion of currency reserves fell after reforms, while in the process of
financial liberalization in the Arab world in General, money, financial assets and an increase in
the ratio of debt to the private sector of GDP was associated. In addition, According to Eltoni
(2003), financial sector reforms, and many Arab countries, already significant improvement in
financial credit brought about a set that illustrated. In this way, the influence of financial sector
reforms in the key financial post in the era of financial reforms on the behavior and credit
collections in establishing targets was taken into account.
Even as credit growth, financial liberalization with financial institutions deposits after a period of
reduced growth occurred. This trend could partially explain the following. Pre-reform period
reserves and credit both fell. The decline in the repression of the former is voluntary financial
portfolio reflect a response. At the beginning of a gradual reform portfolio adjustments new
liberal financial situation was working. In contrast, credit for an additional period of reforms of
development credit with direct control was reviewed by demand. Once the credit and expanded
direct control was removed, it is more rapidly to meet the demand for credit by the Arab financial
institutions answered. The country's external accounts and an increase in the non-pressuring
prices and affected.
Measures to Enhance Competition
Banking financial reforms embarked upon in Arab countries were generally oligopoly market
structure structures. As a result, the speed of adjustment of status and the rate of change in the
conduct of monetary policy conduct lending often slow and slowly adjust the margin between the
rate of deposit and lending. Interest rate liberalization and competition to increase the positive
impact on financial competition, seems to occur with a lag effect.For the financial sector in the
Arab States, and in some cases still is characterized by concentration on banking. For example,
all of the 25 largest Arab Bank, Arab Bank, about 59% 46% total 65% of the total loan, and a
total of 56 percent of the total accosts total assets. Six Arab countries, Saudi Arabia, Egypt, and
banking sectors, the United Arab Emirates, Kuwait, Lebanon and Morocco, around 75% of total
assets and the total of all banks of the Arab reserves 80 per cent. In addition, the three largest
banks in Saudi Arabia's total assets and reserves is about 40 percent from 35 percent. On the
other hand, there are about 70 percent of the total assets, while four banks in Lebanon only Arab
financial sector's 7 represents the Lebanese financial sector. Seven banks in Bahrain and the
United Arab Emirates 40, 40% of the total assets of the six banks, while there are more than the
Arab is not in part 3.
Monetary Policy in Arab Countries
Conduct of monetary policy in consultation, most Arab central banks traditionally Bank access to
specific ceilings and window directly on instruments. However, financial liberalization and
monetary policy, interest rates and credit collections i.e., indirect instruments, market-based
instruments, instead of directly through the administrative fixing of interest rates the ability to
manage through is required.
However, the experience of Arab States immediately after financial liberalization, credit growth,
otherwise in line with the need for control to point directly to the development of the villagers to
use bank deposits, basat (1996). While an initial financial instruments needed to implement
indirect positive real interest rates, unless they were supported by a temporary credit ceilings
based has been used. The Arab money markets in the presence of a mutual Bank reserves to
ensure a well-functioning financial market authorities need to be involved. The Arab central
banks and financial market gradually role vis--vis the principal market maker for support due to
what is the switch. This new capability, and on the move, while the Central Bank reserves, the
Arab money markets in emerging market participants in anticipation of the withdrawal of my
decision to leave is surpluses. Thus, indirect monetary instruments for the development of money
markets in the era of reform post a positive and necessary step. There is a need for more attention
to the growing volume of Islamic finance is an important financial policy challenge. It's
important to organize and Islamic financial institutions the question how best to monitor is
created. The original traditional Islamic financial institution (non-Islamic) banking business to
compete with conventional banks in this way, a legal and financial policy designed to keep
within the code of ethics is to the environment. In General, such as at the end of the Islamic
organization, principal financial and their neither deposits nor return is investment risk guarantee
are common.
This mode shows the operation of Islamic financial institutions need to close supervision and
regulation. Over the past thirty years, the experience was the opposite. In fact, many Arab
countries as the Islamic banks in less than his counterpart of traditional banking supervision
needs to be targeted. Islamic financial institutions are subject to the same risks facing the
traditional banks. The influence of saliency and profit dangers and effects can be a false
economy. In addition, the lack of relevant skills and uniform between the Islamic banking
operations employees quality accounting and tax rates are set by the absence of finance, complex
methods is involved. For the most part, to organize and Islamic financial institutions supervision
basla rules are suitable for. However, these institutions are less than traditional bank counterparts
possibly heart could under the requirements.
social and political unrest. In this way, political instability that result in loss of life or property
rights, infrastructure and physical property damage due to a lack of basic distraction of
uncertainty. Cross-country studies show that political stability, as well as institutional
bureaucracy are linked to financial sector performance with quality, agility and is associated
(Kneef , 1995). According to Albadwa, 1999, institutional and political factors on the
performance of the financial sector in the Arab countries, the effects of two sets of indicators
used to assess. First, there is an absence of corruption, institutional quality initiative to protect
the rights of property and on the implementation of the UN-brokered accord is certificate. Other
civil and regional wars set of indications, such as political instability reflects various aspects of
unconstitutional change of Governments in violent riots and civil and military operations and
employees of their junior year. Albadwa in the Arab world, institutional quality is defined by the
above factors the worst institutional support, particularly for the financial sector and investment
in the region, compared to the world as any other mentioned that have closed. He also said
problems with a range of enforcement and the protection of the rights to property as well as the
most harmful of the Arab financial sector performance and were a serious obstacle to investing in
Arab countries. Historically, the most serious in the world of the Arab world, one of the armed
conflict has been the place for. In addition to the Arab-Israeli conflict, with all its wars and
struggle to resist occupation of Arab countries are influenced by three major wars: 1980s, 1990s,
and several violent types of political dissent in Lebanon and the Sudanese civil war, the civil war,
such as 2003 is also included. Therefore, the argument that the Arab world, as the world's most
politically unstable regions, the quality of institutions is weak in the region is one of the shows.
These results are serious implications for stability and performance of the Arab financial
institutions.
CONCLUSION
Arab financial sector reform is an important role in the Organization and demonstrated that the
positive experience of the Arab financial sector liberalization process is in effect. It also stressed
the strong vision and the success of the financial sector reforms, institutional reforms effective
ingredients are very important for. Most of the significant improvement in the financial reforms
already implement financial credit collections, many Arab banking sectors is due in full.
However, there is also plenty of room for further improvement over the next few years, for
example. These countries have contributed to many of the Arab Bank's foreign currency reserves,
domestic currency deposit ratio and also will experience a migration from short term change, he
will experience extreme right now for the possibility that long-term deposits and their banking
counterparts. Syria, Algeria and Yemen, for his financial reforms, in the early stages, scope for
Arab countries, in addition, the improvement of institutional structures in even more. The effect
of the financial reforms in Arab countries is definitely a notable as shown by the price of the real
interest rate and interest margins on raw-uz-Zaman. However, there is room for further
improvement measures to enhance competitiveness and administrative costs during the next
several years as more a lack of intervention are adopted. For the most part, based on the financial
instruments market in the process of developing the Arab central banks and some are still maintain
that direct. Moreover, prudent fiscal and monetary policies by the Central Bank try Arab and parental
regulations and monitoring measures to maintain financial stability through was employed. However,
most Arab Stock Exchange compared to small developing countries new and underdeveloped, but
left quickly when other private sector role is increasing and the demand for equity investment is
increasing, as are added. Lastly, the argument that the Arab world, as the world's most politically
unstable regions, the quality of institutions is weak in the region is one of the shows. These are
serious implications for performance, stability and Arab financial institutions.
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