An Evaluation of the Impact of Central Bank of Kuwait’s Corporate Governance Regulations on the Profitability of Local Banks: A Case Study of Kuwait Finance House

المعلومات العلمية للعدد

المؤلف

Kuwait International Law School

المستخلص

The Central Bank of Kuwait (CBK) is the main regulatory authority for Kuwaiti banks and is responsible for creating a comprehensive legislative and oversight framework and promoting strong governance standards. Since 2004, CBK has provided guidelines on prudent management and defined corporate governance as the relationship among management, the board of directors, shareholders, and other stakeholders. Following the 2008 Global Financial Crisis, the CBK strengthened its supervisory framework with new regulatory directives, and it has continued to update its guidance with significant revisions in 2012 and 2019[1].
Establishing corporate governance within banking institutions is paramount, especially given inadequate governance practices' heightened risks and consequences. Banks are integral to the economy and interact with diverse stakeholders, such as depositors, borrowers, shareholders, and employees, thereby necessitating robust governance frameworks. Effective governance structures not only play a crucial role in fostering the overall stability of the financial system but also improve the profitability and stability of individual banks.
This study contends that the Central Bank of Kuwait's enforcement of corporate governance regulations has led to enhanced profitability among banks in Kuwait. The findings of the case study indicate a promising effect of these governance measures on the financial performance of Kuwait Finance House (KFH).


الكلمات الرئيسية

المراجع

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    List of Figures and Tables

    Figures                                                                                             Page

    • Figure A/1: Depiction of National Bank of Kuwait net profits (2010–2023).   21 
    • Figure B/1: Depiction of Kuwait Finance House net profits (2010–2023).       21
    • Figure 2: Return on Average Assets of Kuwaiti Banks (2010–Q1 2023).          23
    • Figure 3: Return on Average Equity of Kuwaiti Banks (2010–Q1 2023).          24
    • Figure 4: Net Interest Margin in Kuwaiti Banks (2010–Q1 2023).                    25
    • Figure 5: Operating Expenses Ratio to Gross Income in Kuwaiti Banks           26

    (2010–Q1 2023).

    Tables

    • Table 1: Net Profit in Thousands of Kuwaiti Dinars for NBK and KFH             20

    (2010–2023).

    • Table 2: Percentage Change in Net Profits for NBK and KFH (2010–2023).      22

     

مجلة الحقوق للبحوث القانونية والاقتصادية
المجلد 2.2024، العدد 3
يوليو 2024
الصفحة 785-709

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