The Effects of Bank Regulations, Competition, and Financial Reforms on Banks Performance - Research Paper Example

This paper illustrates that since history repeats itself, it is necessary to examine how each of the central banks of Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Saudi Arabia, Tunisia, and the United Arab Emirates managed to make full use of its banking and financial reforms and regulations as a strategy in preventing risk of banking failure despite the global financial crisis. As a result of going through the individual banking cases of the ten countries, this study examined the strength and weaknesses of several banking regulations and reforms particularly with regards to the issuance of new bank licenses, bank supervisory framework, and other bank-related activities.

Being able to enjoy the benefits of economies of scale is one of the most commonly used economic strategies that will enable the small- and medium-scale banks to have a better competitive edge as compared to other small-scale banks. It is common for banking and financial industry to have oligopolistic market structure. Based on the actual banking management practice of Egypt and the United Arab Emirates, this study thoroughly discussed how increasing the new bank license fee, increasing the actual capital and reserve requirements, the quality of banking management and banking practices could be effective in terms of narrowing down the number of licenses that will be granted to newly established banks.

In line with going through the main discussion, this study tackled how mergers and acquisitions (M&A), as well as joint venture, could be useful in terms of cutting down the number of existing banks in each country.