Fears of the local banking sector being affected by the American banking crisis

Al-Anbat - Sbaa Al-sukkar

Translated by Raghad Saad

Ayesh: Moral repercussions may be affected by local banks in this crisis

Fears of the local banking sector being affected by the American banking crisis

 Al-Tal: The local banking sector will not be affected directly or indirectly as a result of the recent events

The United States recently witnessed many unrest,  the most prominent of which was; The economy declined with high inflation rates, and the US Federal Reserve raised interest rates;  The problem that afflicted the banking sector multiplied in the wake of the collapse of three medium-sized banks in less than a week, in what is considered the largest bank bankruptcy that has occurred since the economic crisis of 2008, to increase fears that the local banking sector will be affected by this crisis later.  

Economic expert Hussam Ayesh indicated that local banks may be affected by this crisis through moral repercussions, such as depositors feeling that their money is in danger, regardless of the fact that these banks may push them to withdraw these deposits, which leads to problems in the banking sector, given that 77% of  Total deposits provide banking facilities, as banks cannot request facilities from customers to pay deposits, explaining that theoretically, depositors can apply once to request their deposits, but in terms of practice, it is close to impossible in some cases.  

And he indicated that the local banking sector manages its investments with great prudence, in addition to the availability of good liquidity (such as the size of deposit facilities), while the Central Bank plays an important supervisory role on the sector and its operations by setting controls for these facilities in some economic sectors, and that local banks enjoy a capital adequacy ratio of about  18%, which is higher than the percentage specified by the Central Bank of 12%, and bank facilities are equal to about 100.1% of GDP from bank assets that exceed 160% of GDP, which means that banks have capabilities to face emergency crises at a safe level and very quickly.  .

 And Ayesh continued, in exclusive statements to  "Al-Anbat ", that no one can predict the manner in which depositors will behave, so the local banking sector is constantly keen to reassure depositors of the possibility of accessing their deposits and their availability, indicating that the banking sector is working to support each other in the event that banks face problems in  Liquidity results from an increase in the demand for deposits, and thus preserves the ability of the banking system to face challenges, in addition to the fact that if individuals are pushed to demand their deposits, they also need the banking sector;  To remain compelled to keep these deposits in the banking system.

He pointed out that the country, in some emergency cases of financial crises, must have a program, scenario, or plans to deal with it, especially when talking about the banking sector so that interest does not drop to the limits that give whoever gives loans without being able to fulfill them later, and so that no  Interest rates rise in a way that affects the ability of individuals and economic sectors to repay their loans, all of which are reflected in the rise in prices in the market, which leads to defaulting of consumers and economic sectors.

Economics professor at the University of Jordan, Dr. Raad Al-Tal, said that the local banking sector will not be affected directly or indirectly as a result of the recent events that faced some American banks, expecting that it may have repercussions in the United States only. 

He explained that this is due to the good monetary and banking sector indicators, in addition to the increase in foreign reserves amounting to 16.7 billion dollars.For total loans, it is low, not exceeding 5%, indicating that all previous indicators indicate that the position of the financial and banking system is reassuring.

 Al-Tal pointed out that "the United States was able to contain what happened intelligently, because it has experience in dealing with such circumstances, and it was not like the 2008 incident."

 Al-Tal indicated that the intervention of the US government by guaranteeing the deposits contributed to containing this crisis.