Measuring the Performance of the Kuwaiti Banking Sector Before and After the Recent Financial Crisis

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.

Keywords: Banking Sector, Financial Performance, Financial ratios, Interest Spread Rate, Kuwait Stock Exchange (KSE), Growth Ratios, Financial Crisis.