Assessing Banking Sector Vulnerabilities in the Gulf Cooperation Council in the Wake of COVID-19

By Abdullah Alhassan, Imen Benmohamed, Aidyn Bibolov, Giovanni Ugazio, Tian Zhang

March 1, 2022

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Abdullah Alhassan, Imen Benmohamed, Aidyn Bibolov, Giovanni Ugazio, and Tian Zhang. Assessing Banking Sector Vulnerabilities in the Gulf Cooperation Council in the Wake of COVID-19, (USA: International Monetary Fund, 2022) accessed November 21, 2024

Disclaimer: The views expressed herein are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The Gulf Cooperation Council region faced a significant economic toll from the COVID-19 pandemic and oil price shocks in 2020. Policymakers responded to the pandemic with decisive and broad measures to support households and businesses and mitigate the long-term impact on the economy. Financial vulnerabilities have been generally contained, reflecting ongoing policy support and the rebound in economic activity and oil prices, as well as banks entering the COVID-19 crisis with strong capital, liquidity, and profitability. The banking systems remained well-capitalized, but profitability and asset quality were adversely affected. Ongoing COVID-19 policy support could also obscure deterioration in asset quality. Policymakers need to continue to strike a balance between supporting recovery and mitigating risks to financial stability, including ensuring that banks’ buffers are adequate to withstand prolonged pandemic and withdrawal of COVID-related policy support measures. Addressing data gaps would help policymakers to further assess vulnerabilities and mitigate sectoral risks.

Subject: Commercial banks, COVID-19, Credit, Financial institutions, Financial regulation and supervision, Financial services, Financial statements, Health, Loans, Money, Public financial management (PFM)

Keywords: Assessing banking sector vulnerability, Bank asset quality, Banking performance, C. bank assets quality, Commercial banks, Corporates performance, COVID-19, Credit, Financial statements, Global, Loans, Middle East, Oil price shock, Policy support, Sovereign-banks-economy nexus

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Departmental Paper No 2022/003
Stock No:

ABSVGCCWCEA
ISBN:

9798400200496
ISSN:

2616-5333

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