The Central Bank of Kuwait (CBK) is the main regulatory authority for Kuwaiti banks and is responsible for creating a comprehensive legislative and oversight framework and promoting strong governance standards. Since 2004, CBK has provided guidelines on prudent management and defined corporate governance as the relationship among management, the board of directors, shareholders, and other stakeholders. Following the 2008 Global Financial Crisis, the CBK strengthened its supervisory framework with new regulatory directives, and it has continued to update its guidance with significant revisions in 2012 and 2019^[1].
Establishing corporate governance within banking institutions is paramount, especially given inadequate governance practices' heightened risks and consequences. Banks are integral to the economy and interact with diverse stakeholders, such as depositors, borrowers, shareholders, and employees, thereby necessitating robust governance frameworks. Effective governance structures not only play a crucial role in fostering the overall stability of the financial system but also improve the profitability and stability of individual banks.
This study contends that the Central Bank of Kuwait's enforcement of corporate governance regulations has led to enhanced profitability among banks in Kuwait. The findings of the case study indicate a promising effect of these governance measures on the financial performance of Kuwait Finance House (KFH).