The Financial Markets of the Arab Gulf : Power, Politics and Money book cover
1st Edition

The Financial Markets of the Arab Gulf
Power, Politics and Money

ISBN 9780815380801
Published November 6, 2018 by Routledge
230 Pages

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Book Description

Financial markets across the Arabian Peninsula have gone from being small, quasi-medieval structures in the 1960s to large world-class groupings of financial institutions. This evolution has been fueled by vast increases in income from oil and natural gas. The Financial Markets of the Arab Gulf presents and analyzes the banks, stock markets, investment companies, money changers and sovereign wealth funds that have grown from this oil wealth and how this income has acted as a buffer between Gulf society at large and the newfound cash reserves of Gulf Cooperation Council states (Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain) over the last fifty years.

By assessing the development of institutions like the Abu Dhabi Investment Authority, the Saudi Arabian Monetary Authority, the Public Investment Fund and the National Bank of Kuwait, The Financial Markets of the Arab Gulf evaluates the growth of the markets and provides a detailed, critical, snapshot of the current form and function of the Gulf’s financial markets. It argues that the markets have been controlled by various state institutions for socio-political reasons. In particular, the Saudi state has used its sophisticated regulatory regime to push for industrialization and diversification, which culminated in the Vision 2030 plan. The UAE, Qatar, Kuwait, Bahrain and Oman have also been strongly involved in establishing modern markets for similar purposes but have done so through different means, with varying results, and each in line with what has been considered their respective comparative advantages.

Along with critically surveying these institutions and their role in global finance, the book also presents case studies depicting transactions typical to the region, including the highly profitable documentary credits of commercial banks, the financial scandal of certain financiers and their regulatory arbitrage between Bahrain and Saudi Arabia, a review of the Dubai’s trade miracle, and an assessment of the value and importance of the privatization of Saudi Aramco.

Table of Contents

  1. A Short History of the Financial Markets in the GCC States

  2. The Commercial Banks

    The Islamic Banks

    The Money Changers

    The Bahraini Offshore Market

    The Capital Markets


  3. The Financial Markets of the United Arab Emirates

  4. Dubai versus Abu Dhabi

    The UAE’s Regulatory Environment

    Free Trade Zones

    The Banking Sector

    Sovereign Wealth Funds

    SWFs, Power Patronage and Asset Ownership


  5. The Financial Markets of Saudi Arabia

  6. SAMA and the Regulatory Environment

    The Capital Markets

    The State Controlled Financing Companies

    The Money Changers

    The Commercial Banks


  7. The Financial Markets of Bahrain, Qatar, Kuwait and Oman

  8. 4.1 The Financial Markets of Bahrain

    The Banking Sector

    The Capital Markets

    Islamic Financial Regulation: A New Niche?

    Bahrain’s Unique Natural Resource


    4.2 The Financial Markets of Qatar

    Qatar’s Energy Markets

    Trade and the Embargo

    The Banking Sector

    The Capital Markets

    The Qatar Investment Authority


    4.3 The Financial Markets of Kuwait

    The National Assembly

    The Capital Markets

    The Banking Sector

    Sovereign Wealth Funds

    SWFs in Crises: The KIO and the Gulf War


    4.4 The Financial Markets of Oman

    Qaboos’s Elite Bargain

    A New Challenge

    Natural Resources and Diversification

    The Banking Sector

    The Capital Markets


  9. The Gulf States in Global Financial Markets

  10. Phase 1: 1960-1985

    Phase 2 1985-Present

    2008: Shifting Tones

    Lasting Change

    Looking East: Energy Investments in Asia and Southeast Asia


  11. Case Studies

  12. Introduction

    6.1 The Saudi Aramco Privatization


    Transparency through Privatization

    To IPO, But Where?


    6.2 Name Lending and the TIBC Bankruptcy


    Regulatory, Personality or Practice: Who is At Fault?


    Name Lending: A Primer

    6.3 Dubai as a Financial Safe Haven

    Indian Gold Smuggling

    Iranian Trade Links


    6.4 Documentary Credits

    The Mechanics



  13. Conclusion

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Dr. Jean-François Seznec is Senior Fellow, Center for Global Energy at the Atlantic Council, Adjunct Professor at Johns Hopkins School of Advanced International Studies and Managing Director at The Lafayette Group.

Samer Joseph Mosis is a Senior Analyst with S&P Global Platts focusing on commodity markets. He previously was a Consultant for The Lafayette Group and holds a Masters Degree in International Economics from Johns Hopkins School of Advanced International Studies