REGULATION OF ISLAMIC BANKING INSTITUTIONS IN KUWAIT
Lulwa Mubarak Al Ben Ali
Abstract:
The Islamic financial system has witnessed a fast pace of growth during the last decade. In the State of Kuwait, the Islamic financial industry has already successfully passed the launching phase towards wider regional and international expansion and it now has its own tangible worldwide presence on the banking and financial map. The Islamic financial system is concentrated in two sectors: the banking sector and the non-banking sector. Both sectors need supervision to ensure that each sector functions within the regulatory guidelines of the nation’s judicial and legal framework. This article will focus on the former, the banking sector, but the LLM thesis from which this article is sourced covers both the banking and the non-banking sectors.
The two main questions addressed in this article are: what are the regulations of Islamic finance in Kuwait and how effective are the supervision authorities over the Islamic finance industry? To answer these questions, the article provides an introduction to the regulatory regime of Islamic banks in Kuwait and an overview of the role of the Central Bank of Kuwait (CBK) in supervising Islamic banks. The author evaluates the CBK’s effectiveness, discusses the current challenges facing regulation of Islamic banks and it concludes with a series of findings and recommendations to improve regulatory and supervisory oversight.