ABSTRACT
With banking, as with any other service activity, a country’s need for facilities will clearly depend to a large extent on its economic structure. In Saudi Arabia even a cursory glance at the economic structure would suggest that the need for banking facilities is likely to be greater than that of countries at a similar level of development, especially given the openness of its economy to trade and financial flows. The almost total dependence on imports, for virtually all local consumption requirements and domestic investment projects, naturally implies a high level of demand for trade finance. Moreover, as much of the kingdom’s workforce is made up of expatriate labour, the banking system has to cope with enormous volumes of remittances destined not only for neighbouring Arab states such as the Yemens, Jordan and Egypt, but also further afield in South Asia, the Far East, Europe and North America. In addition, the scale of local multiplier effects generated by domestic government expenditure puts substantial potentially investible funds into the hands of individual Saudi citizens, funds which the commercial banking system could effectively channel into projects at home or in overseas markets.
