Arab banks during tranquil and turbulent times: A reflection of Arab economies

Can Banks' statistics, indicators, performance, and efficiency provide us with any indications about the causes of Arab Spring? This paper examines the 74 banks' perspective on of Arab countries, where the Arab Spring occurred in Egypt, Libya, Syria, Tunisia and Yemen, versus 241 banks in other fifteen Arab countries. The paper analyzed the aggregate balance sheet items and income statement entries as well as recent trends in total assets, deposits, equity, and net income growth. The paper also examines the evolution of 315 Arab banks over 14 years from 1997 to 2010 of many ratios including Asset quality, capital, operations, and liquidity, and financial soundness. The results show that the majority of banks in the five countries were below the average in their performance. Their ranking, regionally and globally, in terms of the size, performance, and efficiency were weak. The regional and world ranking of these banks gives a glance about the business atmosphere and the economic conditions at these five countries. The Arab Spring refers to the crop of pro-democracy uprisings in 2011 sweeping the Arab countries in the Middle East and North Africa. The Arab Spring began in Tunisia, with the self-immolation of a vegetable seller outside a government building in protest at police harassment. This kicked off a wave of protests that ended with the ouster of Tunisian president Ben Ali. Similar protests soon followed around the Middle East and North Africa region. As result of those protests, the presidents of four Arab countries were changed: Ben Ali president of Tunisia, Mubarak president of Egypt, Ali Abdullah Saleh president of Yemen, Muamar Qadhafi president of Libya. At the time of writing, there have been demonstration and fighting in Syria aiming to change the presidency of Bashar Al-Assad. The putative aim of the Arab Spring was to overthrow oppressive dictatorships and hopefully bring in more accountable democratic governments which would put the interests of people first rather than just the interest of the ruling family. What were the main reasons for the Arab spring? Were the causes primarily political? Or were the economic factors the main motive? Or, was it a combination of socio-economic factors, what were the indicators of that? If, it was economic, were there any indicators signifying the problem might happen soon? Since banks are the main financial institutions in any country, including Arab countries, would their statistics, indicators, performance and efficiency provide us with any indications about the causes of the Arab Spring? Therefore, the aim of this paper is to read and to analyse some of the socio-economic statistics with an emphasis on analysing the size, efficiency and performance of Arab banks for a period of 14 years from 1997 to 2010. This interval covers the time before the Arab spring started. The paper examines the banks' perspective on Arab countries especially five countries namely: Egypt, Libya, Syria, Tunisia and Yemen with the aim to answer why the demonstrations occurred in these countries. The banking system reflects the economy, particularly the private sector, real economy, trade and tourism. The paper argues that banks' performance in a country is a good indicator of the socio-economic conditions in the Arab world. The relative performance of banks in a country to other banks in other countries can tell how good or bad the people's condition is within that country. In the absence of socio-economic indicators, banks' performance indicators can be used as an alternative and give a very close picture about the economic conditions and the investment environment. Good performance of banks indicates the excellent investment climate and the open market of that country. On the other hand, bad performance of banks indicates the poor investment climate and lack of growth as well as a tightly controlled private sector. The paper is structured into four sections. The remainder of this study is organized as follows. Section II provides the background about Arab banking. Section III illustrates the Performance Indicators and Analysis. Finally, Section IV concludes the study.