Abstract
The objective of this research is to investigate the determinants of the performance of the Kuwaiti banking sector before and after the recent financial crisis over the period of 2006-2012. The data utilized is based on the yearly financial statements of the Kuwaiti banks that are listed on Kuwait Stock Exchange over the same period. There are several methods have been used to identify the determinants which impact the performance of the banking sector. In this research, a ratio analysis technique is considered efficient and more reliable method than other approaches. Other factors such as trend, government regulations and other economic factors are also included. The study found that the overall banking sector performance increased considerably in the first two years of the analysis. A significant change in trend is noticed at the onset of the global financial crisis in September 2008, reaching its peak before the global financial crisis. This resulted in decreasing the profitability, return on equity, assets and capital.
Highlights
The banking industry in general is an old industry and it is one the major factors behind the development of the countries’ economies due to the contribution that it provides to the countries and societies.In Kuwait the banking sector is different than the banking sectors in other countries
Return on Assets (ROA) is an indicator of how profitable the company is relative to its total assets
Return on Equity (ROE) is the amount of net income returned as a percentage of shareholders equity
Summary
The banking industry in general is an old industry and it is one the major factors behind the development of the countries’ economies due to the contribution that it provides to the countries and societies. In Kuwait the banking sector is different than the banking sectors in other countries. The banking sector in Kuwait is considered one of the major sectors that are contributing to the Kuwaiti economy. The performance measurement of the banking sector will include an analysis for some internal factors that have a direct affect on the banking sector performance in Kuwait such as the interest rates and the financial ratios. Other factors will be considered such as external factors will be considered such as the growth rates and the Kuwait stock Exchange (KSE) movements during that period since the banks that are included in this research are all listed on the KSE
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