Subject: Banking, Customer system of United Arab Emirates

Subject: Banking, Customer system of United Arab Emirates

Performed:____________________

Received:_____________________

Tashkent State Transport University

Plan
Introduction

1. 
   United Arab Emirates Bank
   
2. 
   State of the Banking Industry
   
3. 
   Impact of asset financing on profitability
   

Literature Used
Introduction
The United Arab Emirates has one of the most vibrant banking and financial sectors in the Middle East. The country’s banking industry is heavily influenced by Islamic financial principles. There are also several foreign banks operating in the country which follow western financial principles. The UAE Central Bank controls banking and financial services in the country. The industry has both indigenous and foreign banks that engage in different forms of financial activities. The UAE financial industry is an active participant in global financial activities. This paper discusses the status of the United Arab Emirates banking industry in a global context.


State of the Banking Industry
The reforms which were carried out in 2003 in the banking industry made it more competitive. Most local banks were either formed in Dubai and Abu Dhabi, and they control a large share of the market. Foreign banks were not allowed to have more than eight branches before 2003, but the reforms eased these restrictions. Foreign banks require special consent from the authorities for them to operate more than eight branches in the country (Hashmi 2007, p.77). These reforms have opened up competition in the banking sector because foreign banks have more freedom to transact than before. Foreign and local banks that offer different services have made the UAE have a very most vibrant financial sector.
All regulatory and supervisory functions in the financial sector are performed by the Central Bank. The country has witnessed rapid growth in Islamic banking by both local and foreign-owned institutions. Hashmi (2007, p. 78) states that Islamic banking laws in the UAE require banks not to charge fixed interest rates on savings and credit. This practice ensures that financial services offered are measured through variable rates of interest. Islamic banking has led many banks in the country to experience positive growth in revenues. This success is due to the fact that Islamic banking is not vulnerable to volatility compared to other forms of banking.
Abu Dhabi and Dubai are the largest financial centers in the country. The bulk of the country’s hydrocarbon reserves are located in Abu Dhabi. Oil and gas exports have made the UAE and other countries in the region to become prosperous. This makes the emirate to have a big influence on economic activities in the UAE. Dubai has a well-developed finance and service industry, which is reputed to be the largest in the Middle East (Hashmi 2007, p. 82). The two emirates have a big influence on financial transactions done in the region. The UAE government has pursued expansionary policies to diversify the country’s earnings from dependence on oil and gas exports. Operations of many financial institutions in the country have, for a long time, been driven by this macroeconomic policy. The banking sector in the country is more exposed to global financial activities than ever before.