The Financial Sector: Performance and Issues

This chapter provides an assessment of the financial sector in Dubai through studying its performance during and after the financial turmoil of 2008–10 and analysing the pending issues that need to be tackled by the authorities. All in all, the soundness indicators of the banking sector show comfortable levels of capitalization with improving liquidity and profitability measures since the 2008 crisis. Nevertheless, Dubai-based banks still present significant exposure to government-related entities (GREs) deeply involved in real estate and construction activities. Moreover, firms operating in Dubai have low access to bank finance and seem to prefer internal funds for financing business and investment operations which seems to be explained mainly by the lack of suitable collateral, especially in the case of SMEs.