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…
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.
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The purpose of this paper is to analyze the effectiveness of the Saudi Arabian Monetary Agency's (SAMA's) regulatory policies.
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.
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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 concerns of…
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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Fawaz Baddar ALHussan and Faten Baddar AL-Husan
Interpersonal and informal ties and networks, known as wasta in the Arab Middle East region, remain a major force in Middle Eastern societies, determining most economic, social…
Abstract
Interpersonal and informal ties and networks, known as wasta in the Arab Middle East region, remain a major force in Middle Eastern societies, determining most economic, social and political outcomes. Yet the literature on informal ties and networks is largely characterized by a lack of contributions from the Arab world, despite the adverse effect that lack of understanding of the wasta phenomenon is having on the effectiveness of expatriate managers and subsequently on business performance. This chapter therefore aims to shed light on the meaning, characteristics, structure, and role of wasta in establishing and maintaining successful business relationships. It ends with recommendations for foreign investors and international managers who wish to establish and maintain successful business relationships in the Middle East on how to capitalize on interpersonal networks within this process.
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Abraham Stefanidis, Moshe Banai and Grace K. Dagher
This study refines theory of social capital by nesting it within a cultural context. More specifically, it aims at describing, explaining, and predicting the role of wasta, a…
Abstract
Purpose
This study refines theory of social capital by nesting it within a cultural context. More specifically, it aims at describing, explaining, and predicting the role of wasta, a social capital concept, as a moderator in the relationship between employees' ethical idealism and work engagement in Lebanon.
Design/methodology/approach
Based on a survey questionnaire translated from English into Arabic, 317 responses were collected from employees in Lebanon. Confirmatory factor analysis and hierarchical regression analysis were employed to test the hypothesized relationships among the examined variables.
Findings
Ethical idealism was found to be positively related to work engagement, and wasta was found to moderate the relationship between ethical idealism and work engagement. Work engagement levels of employees who displayed high levels of ethical idealism were less influenced by the negative effect of wasta than work engagement levels of employees who displayed low levels of ethical idealism.
Practical implications
Human resource managers, international negotiators, and global executives in Lebanon may use the findings of this study to update corporate human resources systems, such as employee recruitment and selection, handbooks, orientation, training programs, and performance appraisal, to better address employee attitudes toward the practice of wasta.
Originality/value
The study adds ethical idealism as an antecedent of work engagement, demonstrating the significant impact that wasta, with its positive and negative characteristics, has on the engagement of employees from the Arab world.
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Ibrahim Mathker Saleh Alotaibi, Mohammad Omar Mohammad Alhejaili, Doaa Mohamed Ibrahim Badran and Mahmoud Abdelgawwad Abdelhady
This paper aims to examine the extent to which these reforms address the limitations of Saudi Arabia’s previous investment framework. Long viewed as a hostile environment in which…
Abstract
Purpose
This paper aims to examine the extent to which these reforms address the limitations of Saudi Arabia’s previous investment framework. Long viewed as a hostile environment in which to do business, the Saudi Government has enacted a broad sweep of measures aimed at restoring investor confidence in central aspects of the country’s evolving private law framework.
Design/methodology/approach
This paper offers a timely assessment of the raft of foreign investment reforms, both legislative and regulatory, that have been introduced in Saudi Arabia over the last decade.
Findings
The paper will proceed by outlining the perceived failings of the old investment regime before going on to reforms.
Originality/value
It will consider the remaining obstacles to the flow of foreign investment in Saudi Arabia in the context of the dual forces that have historically defined the Kingdom’s ambivalent investment law regime.
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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 issued by the…
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.
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 recruitment and…
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).
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Ghassan Adhab Atiyah, Ahmed Ismael Ibrahim and Ahmed Abdulkhudhur Jasim
This research aims to explore the complexities surrounding smart contracts enforcements in cross-jurisdictional transactions.
Abstract
Purpose
This research aims to explore the complexities surrounding smart contracts enforcements in cross-jurisdictional transactions.
Design/methodology/approach
To achieve the aim of this study, doctrinal legal analysis was adopted. Although the subject is multidisciplinary, the aspect of enforcement in cross-jurisdictional transactions from legislative analysis does not require a technical method to be analysed, hence the adoption of this method. Where relevant legal academic journal articles were sourced and analysed along different legislative frameworks in some jurisdictions under review. To determine the legality of smart contracts, applicable law and court with jurisdiction to enforce blockchain smart contract disputes.
Findings
It was discovered that there remain fundamental questions regarding jurisdiction, applicable law and enforcement. Due to the problem of a uniform legislation to manage smart contract transactions.
Research limitations/implications
This study limits itself to the legality of smart contracts within a conflict of laws, and it propels the need for either a choice of domestic legislation for parties to be bound or the adoption of a universal legal framework for all smart contract formation through an international treaty or convention that has a binding effect on contracting parties to a smart contract.
Originality/value
This study highlights the fact that the key elements of smart contracts within traditional contract requirements as provided in domestic legislation vary across jurisdictions. This variation results not only in conflict of law but also affects enforcement in cases of dispute in the contractual terms.