ABSTRACT
Financial sector rent has become an important tool to assess if financial institutions are provided with sufficient incentive for undertaking prudent monitoring as well as maintaining reputation. While this tool has been applied in various analyses for conventional banks, Islamic banks deserve special focus due to their unique and different institutional characteristics. Like other developing and emerging economies, the financial sector in the Gulf Cooperation Council (GCC) is dominated by the banking sector, which is relatively concentrated on a few domestic players dominating the market. The chapter aims to contribute the further argument on the Islamic bank rent opportunity by examining the case of five GCC countries, consisting of Bahrain, Kingdom of Saudi Arabia (KSA), Kuwait, Qatar, and the United Arab Emirates. The chapter discusses the theoretical framework using a concept of Islamic bank rent is expected to contribute to setting up various hypotheses for explaining the Islamic banking practice in each country.
