Middle East financial marketKuwait belongs to the leading financial centers within the Middle East and Africa with a score of 620 on the Global Financial Centers Index. The rating of financial centers of the private institute Z/Yen evaluates the factors such as combativeness, business environment, human capital, taxation, and infrastructure for its ranking. Within the Gulf Cooperation Council region, the United Arab Emirates leads in terms of the value of total assets of commercial banks with 775.2 billion U.S. dollars. At the same time, the value of total assets of commercial banks in Kuwait was worth around 320 billion U.S. dollars. Kuwait is amongst the leading countries in the Middle East for online banking and financial technology. In 2020 there were around 28 financial technology startups in the country.
Islamic bankingKuwait takes a leading role as well in the Islamic banking sector, not only within the Middle East region but also in the global context. About 6.3 percent of the global Islamic banking assets worldwide are held by Kuwait. Ranking it fifth behind Iran, Saudi Arabia, Malaysia, and the United Arab Emirates. As of 2020, Islamic banks in Kuwait grew by 8.8 percent, compared to conventional banks in the country which only experienced a growth of 0.5 percent for the same period.
Islamic banking, in contrast to the conventional banking sector, is a banking system that conforms to the beliefs of Islam and its traditions. The main difference between Islamic banking and conventional banking is that in Islam, any profit from interest (or to some, usury) is prohibited, as per Sharia law. Money is seen as a measuring tool for value and not as an asset itself. Therefore, money should not be received as income just from money itself, as is the case with interest. Therefore, risks in financial dealings should be shared by all parties involved. Islamic banks tend to generate their income from entering a partnership in a business and receiving a share of the profits. Other leading products in the Islamic financial sectors are sukuk bonds, as well as Islamic insurance called takaful, which is in line with Islamic business ethics.