The UAE Banking Regulatory and Market Framework: Emphasis on Banking Industry Strengths, Weaknesses, Opportunities, and Threats Analysis

Abstract

The United Arab Emirates (UAE) banking industry has emerged as one of the most dynamic in the region, converting the country into a financial centre for the Middle East. It also plays an important role in the county's economic development and in meeting the needs of its public demands by providing Sharia compliant financial institutions (Referred as Islamic Banking).The UAE has 52 commercial banks, out of which 24 are National Banks with 795 branches, and 28 are Foreign Banks with 153 branches. In addition, the UAE has 2 Investment Banks, 2 Wholesale Banks, 24 Finance Companies with 23 branches, and 20 Investment Companies (Central Bank of the United Arab Emirates, 2009). This large subset of financial sector needs to regulated and monitored because of two reasons. First, the microeconomic concerns that relates to the ability of bank creditors (depositors) to monitor the risks originating on the lending side. Second, the macroeconomic concerns that relates to the stability of the banking system in the case of a bank crisis (Heimler, 2006).The focus of this paper is two folds. First, it describes the UAE banking regulatory and market framework to give a better understanding of UAE banking regulatory industry. Second, Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis was conducted on 6 banks (selected based on the availability of primary data) to see if its support the UAE efforts to be the centre of excellence.The paper concludes that the bank regulatory and market framework within the UAE is well-regulated. In addition, the SWOT analysis provides insight into banking industry, but further work needs to be done to collect more data which can be utilised to bring further improvements in baking industry within the UAE.