Kuwait: Financial System Stability Assessment: Update

IMF Staff Country Reports, July 30, 2010

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Kuwait: Financial System Stability Assessment: Update

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Bibliographic details

• Published: July 30, 2010
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781455204878.002

Summary and key findings

• The global financial crisis has adversely affected Kuwait’s financial system, especially in the Investment Company (IC) sector.
• Stress tests indicate that, in contrast to the ICs, the banking system could broadly withstand significant shocks.
• The Central Bank of Kuwait's (CBK) well-designed framework for banks has proven effective in shielding the banking sector from the crisis.
• The enactment of the capital market law is an important step toward the creation of Certified Management Accountant (CMA).
• A powerful regulatory regime is needed for the insurance sector.

Stress test results and financial-sector resilience

• Banking system:
  • Stress tests show the banking system could broadly withstand significant shocks.
  • CBK’s regulatory framework for banks has proven effective in shielding the banking sector from the crisis.
• Investment Company (IC) sector:
  • The IC sector was especially adversely affected by the global financial crisis.
  • Stress tests indicate ICs are more vulnerable compared with banks.
• Insurance sector:
  • The study finds the insurance sector requires a powerful regulatory regime.

Policy implications and recommendations

• Maintain and reinforce the Central Bank of Kuwait's (CBK) well-designed framework for banks to preserve resilience to shocks.
• Prioritize enactment and implementation of the capital market law as an important step toward establishing a Certified Management Accountant (CMA).
• Develop and implement a stronger regulatory regime for the insurance sector to address identified vulnerabilities.
• Continue monitoring and stress-testing across sectors, with particular focus on the Investment Company (IC) sector and nonbank financial institutions.

Subject coverage and keywords (as listed)

• Subjects: Asset and liability management, Banking, Capital adequacy requirements, Commercial banks, Financial crises, Financial institutions, Loans, Nonperforming loans
• Keywords: asset quality, asset-liability structure, balance sheet composition, banking system, CBK law, Commercial banks, CR, due diligence, financial crisis, financial support, Global, ICs asset, interest rate, ISCR, Loans, market risk stress tests, Nonperforming loans, one-way market, price discovery, return on assets, risk profile, risk stress tests

Content in this bundle

• Kuwait: Financial System Stability Assessment—Update; IMF Country Report 10/239; July 1, 2010
  • Kuwait: Financial System Stability Assessment—Update; IMF Country Report 10/239; July 1, 2010 (Markdown version)
  • Kuwait: Financial System Stability Assessment—Update; IMF Country Report 10/239; July 1, 2010 (PDF)