Banking industry in Saudi Arabia - statistics & facts
The banking sector constitutes financial institutions that accept monetary deposits and who operate in the lending process of the capital market. Today’s banking system is based on the Venetian financial market of the 14th century. The total assets of banks globally amounted to 182.9 trillion U.S. dollars. This has almost tripled in value in comparison to the beginning of the millennium. This is significant, particularly bearing in mind that the financial sector had experienced a major crisis in the interim.
One main aspect of the financial market in Saudi Arabia is the Islamic banking sector. The Kingdom of Saudi Arabia is a Muslim country in which Shariah law is the guideline for many rules and regulations for life and business. One main factor of the Islamic banking system is that it operates as non-interest banking since taking interest on loans is forbidden according to Islamic law. Profits for Islamic banks are generated through equity participation. This means that a borrower gives the bank a share of its profit. Further, Islamic banking differentiates itself from other conventional financial institutions by abstaining from investments in fields contrary to Islamic morals such as business involving alcohol, pork, and gambling.
Over 30.6 percent of global Islamic banking assets are held in Saudi Arabia, making it an important hub for this market.
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