In a world where the credibility of experts is increasingly questioned, the Arab banking sector faces a pivotal challenge. The rise of populist sentiments, coupled with skepticism towards those in positions of authority, has cast a shadow over traditional expertise-driven decision-making. This skepticism, fueled by economic turmoil and policy failures, is reshaping the landscape of economic governance. For Arab banks, navigating this complex terrain requires not only a thorough grasp of economic fundamentals but also a nuanced understanding of the evolving relationship between experts and the public.
Economic Shifts and the Arab Banking Response
The distrust in expertise, a phenomenon gaining momentum across the globe, has its roots in several interlinked developments. The aftermath of the 2008 financial crisis, characterized by high inflation and stagnant productivity, has played a significant role in fueling public resentment. Families grappling with the fear of declining fortunes have directed their frustrations towards the technocratic elite, perceived as detached and self-serving.
This disillusionment is not without basis. The crisis moments of the last two decades, including the near-collapse of the global financial system and the mishandling of the COVID-19 pandemic, highlight the limitations of independent expertise. Notably, policies like quantitative easing, aimed at economic stabilization, inadvertently led to increased wealth inequality, benefiting asset owners disproportionately. Such outcomes have provoked critical reassessment of long-held economic doctrines.
This reassessment is particularly evident in competition policy. The traditional Chicago School approach, dominant since the 1970s, is giving way to a renewed focus on the structural market power of companies. This shift, influenced by technological advancements and geopolitical considerations, signals a departure from the emphasis on consumer prices and skepticism towards state intervention.
For Arab banks, these global shifts necessitate a strategic reevaluation of their roles and practices. The traditional reliance on technocratic decision-making must evolve to incorporate broader societal concerns and a deeper engagement with public sentiment. This is especially critical as the banking sector navigates the intricacies of an increasingly digital economy, marked by rapid advancements in areas like artificial intelligence and blockchain technology.
Moreover, the resurgence of industrial policies, driven by strategic needs in sectors such as advanced semiconductors and batteries, poses both challenges and opportunities for Arab economies. Banks must balance the imperatives of technological innovation and fair competition, while also considering the geopolitical landscape. Decisions in these areas are no longer confined to the realms of technocrats; they now require a holistic approach that considers political, social, and economic factors.
This changing landscape also presents an opportunity for Arab banks to lead in fostering a new model of expertise, one that is more inclusive, transparent, and responsive to public concerns. Engaging in open dialogues, embracing participatory decision-making processes, and demonstrating a genuine commitment to societal well-being can help rebuild public trust.
In the Arab world, the implications of these shifts are profound. The banking sector, a cornerstone of the regional economy, must adapt to maintain its relevance and effectiveness. Strategies that prioritize sustainable development, financial inclusivity, and technological innovation, while remaining sensitive to cultural and societal nuances, are imperative. Arab banks are uniquely positioned to bridge the gap between global economic trends and regional needs, playing a pivotal role in shaping a future where expertise is both respected and aligned with the public interest.
As the Arab banking sector navigates this era of transformation, the path forward lies in harmonizing expertise with public engagement. By redefining the role of experts and fostering trust through transparency and inclusivity, Arab banks can not only adapt to the changing landscape but also lead it towards a more sustainable and equitable future.