Banking and the political situation in Bahrain - Essay Example

The rising issue of increased political pressure and financial crisis are affecting the business operations of financial sector of Bahrain (Shachmurove, 2003). Bahrain is also observed to be the largest financial centre among the ‘Gulf Cooperation Council’ (GCC). The GCC countries are majorly dependent on oil exports on a fixed exchange rate. In the GCC region, the banking sector is considered to be the main dominating player in financial terms. In this respect, the Islamic banks are perceived to be growing in an immense manner and are determined to be the ultimate foundation for financial transactions amid the gulf countries.

The banking sector of Bahrain is recognised to be accountable to be the major contributor of ‘Gross Domestic Products (GDP) growth. Bahrain is identified to be acquiring around 80% of the GDP in relation to investment funds. The main objective of Bahrain is to obtain the leading position as a financial hub (INSEAD, 2011; Al-Hassan & et. al., 2010). BNP Paribas is recognised as among the leading banking institutions which is one of the leading financial service providers in the European regions.

The bank is identified to be present in around 80 countries. Moreover, the bank employs about 200,000 individuals on a global context. BNP offers three major services which include retail banking, ‘corporate and investment banking’ as well as investment solutions (Bahrain Economic Development Board, 2008). Al Salam Bank-Bahrain (B.S.C) began its business operations in the year 2006 and the bank is located in Bahrain. It is observed to be performing business operations in a differentiation manner for acquiring huge capital and proficient as well as experienced management team.

The bank adopts standards and principles which are recognised at international level for its transparency as well as integrity (Al Salam Bank Bahrain, 2012). Topic to Be Addressed The subject of the proposed research study is to determine the impact of adverse political and financial conditions on the banking sector in Bahrain. Moreover, the proposed research study will assist in ascertaining the importance of stable political conditions for businesses to perform their operations effectively.

Project Background In Bahrain, BNP Paribas is recognised to be the principal foreign bank. The bank has established two offices in Dubai with the objective of defending itself from unstable political scenarios and financial crisis. The proposed research study will be based on the analysing the factors which are seemingly affecting the operations as well as competitiveness of the banking sector in Bahrain. In this regard, the impact of unstable political situations and financial crisis of the banking sector of Bahrain will be studied in order to improve their situations.

Justification of the Topic Chosen In relation to the present day context, it has been observed that the political condition of a country is significantly affecting the economic as well as business environment. Moreover, there are other specific external factors which are demonstrated to be impacting a country’s political and economic conditions both positively as well as negatively. In this regard, the major problem which has been recognised in this proposed study is changes in the political conditions affecting the financial sector in Bahrain.

This problem is also identified to be hampering the competitiveness of its financial sector on a global context. Research Question On the basis of identification of the research problem, the