KBA Workshop - Euromoney Conferences

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Is “state-run funding” the way to go? 2. Opportunity cost consideration: The banking sector will be deprived from a significant share of the credit market, with a negative effect on the profitability of this sector. It would lure away investors and new projects from the Kuwaiti commercial banks. The banking sector will be subjected to unfair competition, given that the state fund would not necessarily be subject to Central Bank regulation. That is no interference from the Central Bank despite the fact that banking services are provided (Asymmetry of regulation). More importantly, this will result into a missed opportunity in relation to financial deepening.
Is “state funding” the way to go? 3. Efficiency consideration: The increase in supply of credit might lead commercial banks to ease the screening process for loan approval, (and therefore the violation of safe standards for credit). The tendency for credit being granted based on “other” considerations. That is, there is a risk of “soft conditions” the state-run funding will bring. Interest rates will be put under pressure causing the Central Bank of Kuwait to lose one of its most important monetary policy intervention tools in the saving and consumer market, which is harmful to the economy as a whole.
Page 1 and 2: The Finance-Development Nexus: The
Page 3 and 4: Financial Development and Economic
Page 5 and 6: How does the “supply leading” h
Page 7 and 8: The “demand following” hypothes
Page 9 and 10: Which direction of causation in the
Page 11 and 12: Commonly cited “worries”: The
Page 13: Is “state-run funding” the way
Page 17 and 18: Is the banking sector able to handl

KBA Workshop - Euromoney Conferences

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