Hussein A. Hassan Al-Tamimi

Measuring perceived service quality at UAE commercial banks

Service quality is becoming more critical for banks to maintain their market shares. This paper develops a modified SERVQUAL for measuring service quality in the United Arab Emirates commercial banks. The instrument includes thirty items that belong to the five dimensions of SERVQUAL. The developed instrument was tested for reliability and validity and the results indicated that the instrument had only three dimensions. This paper also investigates the difference in significance between the instruments dimensions. This is supposed to help managers focus their attention on the service quality dimension that matters most to customers.

Banks' risk management: a comparison study of UAE national and foreign banks

Purpose - The purpose of this research is to examine the degree to which the UAE banks use risk management practices and techniques in dealing with different types of risk. The secondary objective is to compare risk management practices between the two sets of banks. Design/methodology/approach - The authors developed a modified questionnaire, divided into two parts. The first part covers six aspects: understanding risk and risk management; risk identification; risk assessment and analysis; risk monitoring; risk management practices; and credit risk analysis. This part includes 43 closed-ended questions based on an interval scale. The second part consists of two closed-ended questions based on an ordinal scale dealing with two topics: methods of risk identification, and risks facing the sample banks. Findings - This study found that the three most important types of risk facing the UAE commercial banks are foreign exchange risk, followed by credit risk, then operating risk. It also found that the UAE banks are somewhat efficient in managing risk, and risk identification and risk assessment and analysis are the most influencing variables in risk management practices. Finally, the results indicate that there is a significant difference between the UAE national and foreign banks in the practice of risk assessment and analysis, and in risk monitoring and controlling. Originality/value - The article will be of value to those interested in the banking industry.

Financial literacy and investment decisions of UAE investors

Purpose - The purpose of this paper is to assess the financial literacy of the UAE individual investors who invest in the local financial markets. In addition, it examines the relationship between financial literacy and the influence of the factors that affect the investment decision. Design/methodology/approach - A modified questionnaire has been developed divided into three parts. The first part covers demographic variables. The second part identifies 37 factors affecting the investment decision of the UAE investors. The third part is devoted to financial literacy using exam-type questions of true or false and includes 18 questions. A convenient sample of 290 of UAE national investors is used. Findings - The results indicate that the financial literacy of UAE investors is far from the needed level. The financial literacy level is found to be affected by income level, education level, and workplace activity. High-income respondents hold high educational degrees, and those who work in the field of finance/banking or investment had as expected a higher financial literacy level than others. Whereas, financial illiteracy exists regardless of the age of the respondents. A significant difference in the level of financial literacy was found as well between the respondents according to their gender. Specifically, women have a lower level of financial literacy than men. Finally, the results indicate that there is a significant relationship between financial literacy and investment decisions. The most influencing factor that affects the investment decision is religious reasons and the least affecting factor is rumors. Originality/value - The current study is considered the first of its kind conducted on the UAE. To the best of our knowledge, no such studies have been conducted regarding measuring financial literacy in the UAE or the relation between financial literacy level and the factors that influence the investment decisions.

Factors Affecting Stock Prices in the UAE Financial Markets

The stock market in the United Arab Emirates (UAE) is one of the emerging markets. It needs to be developed to operate efficiently and effectively in a competitive stock market environment. The current study represents an attempt to investigate the main factors determining stock prices in the UAE stock markets. The data of our study covers the period from 1990 to 2005. The sample consists of 17 companies based on the availability of the data for that period. The regression model was run for the UAE financial markets sample with five independent variables after dropping oil price and dividend per share because of multicollinearity problems. The findings of this study are consistent with most previous studies. Results indicate a strong and positive impact of EPS (earnings per share) on the UAE stock prices. The estimated coefficients of money supply and GDP were, as expected, positive but statistically insignificant. Moreover, the estimated coefficients of consumer price index and interest rate were as expected, negative and statistically significant at the 1% level in the case of consumer price index, but statistically insignificant in the case of interest rate.

Finance and Growth: Evidence from Some Arab Countries

ABSTRACT This paper estimates the causal relationships between financial development and economic growth for selected Arab countries using cointegration, Granger causality, and the impulse response function techniques. The results indicate that, in the long run, it seems that financial development and real GDP growth are strongly linked. However, in the short-run, the linkage is weak as Granger causality tests and the impulse response functions indicate that causality between real GDP and financial development exists only in four cases. Moreover, for these few cases, there is no clear evidence that financial development affects or is affected by economic growth.

Multiple approaches in performance assessment of UAE commercial banks

Purpose - The purpose of this paper is to assess performance factors in the UAE commercial banks by using multiple approaches taking into consideration the effect of the bank size. Design/methodology/approach - The UAE banking sector is divided, for the purpose of this research, into two groups: large and small based on the total assets. The last balance sheet has been used for size classification; those with total assets of AED10 billion and above are considered large banks, whereas banks with total assets less than AED10 billion are considered small banks. This classification criteria led to a sample of 15 large and 23 small banks. The number of banks included in this study is only 38 banks due to the scarcity of available information. Data for the study cover the period from 1996 to 2005. Findings - The main findings of this study indicate that generally large banks perform better than small banks. The results partially confirmed the hypothesis that there is a positive and significant statistical difference between the small and large banks regarding bank performance indicators. Finally, the results reveal that the ratio of total equity to total assets, which reflect the importance of capital adequacy to commercial banks, is the most important performance indicator taking into account the bank size. In other words, it was the determinative factor in the classification of banks into large or small ones. Practical implications - The papers findings support the proposition that in an environment where banks are highly fragmented, mostly small, and are not performing well, there is a need to consolidate the operations of some of these banks. That is, small banks, and even large ones, might be better off, if they are merged into one major institution in order to reduce waste and improve efficiency. Originality/value - The paper will be of value to UAE banks and those interested in investment in the UAE financial markets.

Corporate Social Responsibility Practices of UAE Banks

The study aims at investigating corporate social responsibility (CSR) practices of UAE banks. A modified questionnaire has been developed. The questionnaire is divided into two parts. The first part covers general information, namely the experience, position and educational level of the respondent. The second part consists of 18 questions about awareness of CSR, CSR dimensions, the most important issues of CSR, CSR instruments, stakeholders’ engagement and co-operation, the community activities carried out by UAE banks, voluntary activities to mitigate climate change, CSR practices, organizational responsibility for CSR, CSR payback, public policy support for corporate social responsibility and the relationship with the stakeholders. The main results indicate that the UAE banks are aware of the concept of corporate social responsibility; they place more emphasis on compliance with mandatory social and environmental legislation and less on the non-mandatory legislation; the social specific issues are the most important ones; the banks collect information about/from stakeholders and consult stakeholders and participate in multi-stakeholder initiatives; the banks contribute positively in supporting community activities, for instance through donations and sponsorship; the banks are not heavily involved in problems of climate change; the banks ensure equal access to their banking services for all women, irrespective of their marital status, race, etc.; the banks meet the mandatory legislation requirements related to CSR; and finally, the majority of the respondents (90 percent) indicated that it is important for their banks to inform stakeholders about their corporate social responsibility activity.

The Impact of Owner’s Identity on Banks’ Capital Adequacy and Liquidity Risk

Abstract In this article, we test the potential impact of the owner’s identity on banks’ capital adequacy and liquidity risk as defined by the Basel III regulatory framework. Using a unique dataset on a sample of banks domiciled in the Middle East and North Africa region, we find that the ownership structure is an important driver of banks’ regulatory capital and liquidity risk. Private and foreign investors exhibit a stronger preference for higher levels of capital, whereas the impact of government ownership on banks’ risk remains inconclusive. Moreover, privately-owned banks evidenced lower levels of liquidity risk compared to the other groups during the last financial crisis because of tighter budget constraints and more compelling liquidity needs.

Readiness of the UAE banks for the implementation of Basel III

The objective of this study is to investigate the UAE banks readiness for Basel III implementation. It is crucial for the UAE banks to have good preparation to make sure their compliance with international standards and practices in the banking sector. The authors developed a modified questionnaire based on a survey conducted by the Bank for International Settlements (BIS) in 2013 on Basel III implementation. In addition, Quantifi and Ernst % Young Survey (2013) were used in this study. The study attempted to answer four questions and test three hypotheses about the UAE banks implementation of Basel III. The results indicate that the UAE banks were aware of the benefits of the implementation of Basel III; the UAE banks employees were well educated about Basel III and they were ready for the implementation of Basel III as they have the required resources and trained managers. In addition, the regression results indicate that the most important factor of Basel III implementation is the availability of the needed resources.

Corporate Governance Practices and the Role of the Board of Directors: Evidence from UAE Conventional and Islamic Banks

The purpose of this study is to examine the United Arab Emirates (UAE) national banks’ practices of corporate governance regarding the role of the board of directors in the formulation and implementation of bank policies and strategies. A modified questionnaire has been used with two parts; the first part covers general information, and the second part consists of 44 questions about eight characteristics of corporate governance. The targeted population of this study was the board of directors of UAE national banks. The results indicate that the UAE banks’ board of directors are satisfied with the compensation system; they are aware of the importance of the relationship with the shareholders; they understand and develop a good relationship with stakeholders; the composition of the UAE banks’ board of directors is appropriate; meetings of the UAE banks’ board of directors are effective and productive; the UAE banks’ board of directors are satisfied with the chairman’s leadership skills and performance; and finally, the UAE banks’ board of directors are aware of the requirements of corporate governance practices. Furthermore, the results indicate that there is a significant positive relationship between the role of the UAE banks’ board of directors and their education background, as well as their experience, compensation and corporate governance awareness. In addition, the statistical results confirmed that there is no significant difference in the role of the board of directors between the UAE conventional banks and Islamic banks.