Click here for the hard truth about the current job marketAugust 31, 2015 8:50
Rating the exchange
The debut of the Bahrain Financial Exchange is another step in the tiny country’s efforts to diversify itself from its neighbors. But is there a demand?
May 7, 2010 10:02 by Emily Meredith
It now dominates that field. According to recent report from the Oxford Business Group, 27 of the 140 banks operating in Bahrain were Shariah-compliant lenders, as were 18 out of 177 insurance policy writers. In order to support the field, the Central Bank of Bahrain established the Waqf Fund for Research, Education and Training to further advance education and knowledge in the Islamic financial industry and to encourage people to seek careers in that industry.
Bahrain also hosts the Accounting and Auditing Organization for Islamic Financial Institutions, a non-profit organization that sets standards for Shariah investments and institutions. Investment has been further encouraged by institutional reform in the country. In the region’s traditional governance-as-a-form-of-patronage system, critics have long asserted that the ministries are not nearly as efficient as they could be. But because of the political implications of ministerial reforms, change often comes by establishing a second, parallel institution, according to Steffen Hertog, a professor at France’s Sciences Po and author of The Political Economy of Institutional Reform in Saudi Arabia.
Bahrain’s reformers have been more aggressive in the kinds of reform that open the economy, Hertog says. The country’s legacy has made it an attractive hub for financial entrepreneurs and in recent years regional players such as Unicorn Investments and Gulf Finance House chose to set up in the area.
But whether Bahrain can maintain its status as the international hub may depend more on the action of its neighbors than on the new institutions Bahrain sets up.
The announcement that the exchange will not open until in October masked potential bad news; after all, the exchange was originally set to open in the first quarter. Perhaps most telling was a statement from the company in which the CEO Arshad Khan said its business development managers had “been engaging with the market to build up a solid base of membership across the MENA region.”