Financial Stability of GCC Banks in the COVID-19 Crisis: A Simulation Approach

• 발행기관: 한국유통과학회
• 저자명: Sami AL-KHARUSI Sree Rama MURTHY
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 7 No.12, 337~344쪽, 전체 8쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2020.12.30

영문 초록

Stability and sustainability of the biggest banks in any country are extremely important. When big banks become unstable and vulnerable, they typically stop lending. The resulting credit squeeze pushes the economy into recession or a slow growth path. The present study examines the financial stability and sustainability of the 30 large banks operating in the six Gulf Cooperation Council countries. These banks represent 70% of the GCC banking market. Monte Carlo simulation was attempted assuming that key drivers can vary randomly by twenty percent on either side of the current values. The conclusions are drawn based on 300 simulation trails of the five-year forecast balance and income statement of each bank. Year 2020 is not favorable for the GCC countries because of the COVID-19 pandemic and low oil prices, though the future years may be better. The study identifies several banks, which may become financially unsustainable because the simulations indicate the possibility of negative profitability, unacceptably low capital ratios and potential for heavy credit losses during periods of economic turbulence, which is the current situation due to the COVID-19 pandemic. Through simulation the paper is able to throw light on which factors lead to bank instability and weakness.

목차

1. Introduction

2. Review of Literature

3. Data and Methodology

4. Simulation Results

5. Conclusions

References

키워드

Financial Sustainability Banks Publicly Traded Simulation Gulf Cooperation Council