1. Saudi Companies Fund
A. The institution of SAMA could not be a profit-making institution, it had to conform to Islamic law. SAMA has from time to time financed one-half of government debt. From 1962 to 1983, the governments earning grew in surplus, and all the debt was repaid. Whenever the government needed SAMA bolstered government reserves.
B. In 1966 a major banking control law clarified and strengthened SAMA's role in regulating the banking system. Foreign banks submitted application for license. SAMA sent its recommendation to the ministry of finance. The ministry set conditions for granting licenses to foreign banks.
C. Saudi companies introduced a great deal of regulation abiding with Sharia law. This law also defined requirements against deposits. There were several restriction to abide by SAMA's implementation of monetary policy.
2. The Saudi financial system
A. The Saudi financial system had three autonomous government institutions. They were the pension fund, the general organization of Saudi insurance, and Saudi fund for development. These government institutions played an important role in proving finance foreign currency holdings, and deposits with SAMA. High oil prices boosted Saudi economy. International interest rates were low, so domestic savings rates increased the stock exchange. The trading companies domestic investment increased, which gave a boot to stock exchange.
B. The Saudi stock exchange was not open to foreign investment, only shares of Saudi companies could be traded. In 1991 the Arab National Bank partially funded by Jordanian capital, received permission to launch a stocks. The estimated market value of shares was no more than 5 percent. This way the ownership was owned by institutions rather than individuals, which made a story Saudi stock market.
C. The global financial crisis has not affected the Saudi Banking system, the immediate impact is limited. In some cases where international exposure is high, it does not...