Conference Paper
Did the US Federal Reserve Policy Harm the Stability of GCC Banks?
No.
ERF30_99
Publisher
ERF
Date
March, 2024
This study analyzed the performance and risk management practices of the top banks in the GCC during a period of significant turmoil following several bank failures in the US. Our analysis identifies leaders and laggards in a peer group of 10 GCC banks. High performing banks maintain a sustainable managerial style of their capital ratio, liquidity and profitability during a period of rising interest rate whereas laggards fail to cope with the interest rate challenges they face. Our examination of the unrealized losses that banks suffered as a result of the sharp rise in interest rates supports the IMF concern that banks in the Middle East may mask their losses and receive regulatory forbearance to carry them forward. The size of the unrealized losses, which in some cases represent 3% of capital, raises questions about the bank’s risk controls and established limits and the Central Bank regulatory oversight.
Research Fellows
Mahmoud Haddad
Professor, The University of Tennessee at Martin,...