Report on Bank Nizwa In Oman

Bank Nizwa is considered the first Islamic bank in Oman which served its customers according to sharia compliance in dealing with its products and services. The bank offers a portfolio for the other commercial banks which were issued by the Central bank and banking law enforced in Oman by the Royal Decree no. 114/2000. Bank Nizwa is a public based bank which was founded in 2012 as Islamic banking and currently operated 13 branches in the Sultanate of Oman. The product and services of the Bank Nizwa are current accounts, savings account, Marhaba finance, Hijrah finance and other Islamic terms functioning in the banking industry. Its headquarter is in Muscat, and it is listed in the Muscat Stock Market. In December 2018, the bank-owned 353 to 600 employees who are engaged in serving the people of Oman (S. Al-Muharrami, 2015).

The research paper is based on the different tasks which are divided into different sections to elaborate on the various terms relevant to Bank Nizwa. The first task is a discussion about the capital market and its different efficiencies in Muscat stock Market. Capital market is referred to as the terms which explained the medium where the Bank Nizwa exchange the shares in terms of investment with the saving of people. The most common capital markets in the Muscat Stock Market are the stock market and the bond market. The second task is to explain about the informational efficiencies of Bank Nizwa, which includes the funding investment in the bank by people. The third task is a discussion about the implication of Efficient Market Hypothesis (EMH) which exist in there forms different form of allocation of resources. It includes different approaches of Efficient Market Hypothesis (EMH) in bank nizwa, which are implemented by the management of the bank (V. Arora, Nravichandran, & Jain, 2011).

Conceptualization and its Importance and Analysis of EMH

1. Capital Market and Efficiencies  of BANK NIZWA in Oman

Capital market refers to a market where buyers and sellers trade financial products including securities, stock, and bonds. Such buying and selling practices can be undertaken by the institutes and individual entities. Different types of market efficiencies include informational efficiency for traders, allocative efficiency and operational efficiency of the capital market. According to the research study, information about market value and current market prices should be reflected in capital markets for information efficiency (Al-Habsi & Al-Amri, 2017). The rationality of investors and tractions supported with cost-effective practices ensure operational efficiency in the capital market. Many companies listed on Muscat Stock Market are following the strategies which promote efficiency in the capital market. Bank Nizwa Oman is one of those companies which are listed on Muscat Stock Market. The analysis shows that Bank Nizwa Oman is projecting all important information about its financial operations and outcomes for its investors. Information about corporate management and future projects of the Bank Nizwa enables the proposed investors to make the right decision about investment in the offered securities, stock, and bonds of the bank. According to the research study, investors invest in active management if the market is inefficient in a particular sector. Although, rational investors earn abnormal returns and profit from stock because of stock market growth and an increase in the stock prices.  The researcher also concludes that macroeconomic variables also draw an impact on capital markets such as the stock market. An increase in interest rate changes investors' response towards interest-bearing securities and bonds. While the change in the market value of shares is also a turning point for investors regarding a particular listed company on Muscat stock exchange.     

2. Informational Efficiencies of BANK NIZWA in Oman

Capital market efficiency exists in 3 forms, which include informational efficiency for traders, allocative efficiency and operational efficiency of the capital market. Following the research study of Al-Habsi and Al-Amri (2017), financial index returns have no autocorrelation as the null hypothesis was rejected based on a lower significance level. Oil prices analyzed as independent variables of macroeconomics concluded that oil prices are positively linked with financial indexes. While at the same time increase in CPI is directly related to a decreasing in inflation. Such information is highly important for the investors at the time of selection in the capital market.  Informational efficiency relates theories and concepts indicate that investors rely upon informational efficiency for rational decision making. Although risk-adjusted securities in an inefficient market have a greater investment as investors use common tools of analysis to evaluate such markets. According to the research findings, stock prices with share information about the historical performance of stock reflects better estimate about the intrinsic and market value of the stock in future which is a factor of attraction for investors. In weak-form market inefficiencies, technical analysis and detailed analysis cannot benefit an investor to gain a higher return on investment from stock markets by investment in growing stock (Al-Habsi & Al-Amri, 2017).        

3. Assumptions of EMH of BANK NIZWA in Oman

The efficient market hypothesis suggests that the financial markets operated in the market to deal with any business. The validity of the efficient market hypothesis is based on some assumptions. An efficient market hypothesis is working with the assumptions which are related to the information which is determined by the stock market. The efficient market hypothesis assumed security that is financially based on the determined price. Moreover, it is also assumed that the stock of the business would never be overvalued or undervalued. The efficient market hypothesis implies that the investors will implement further investment strategies that help invest in any market (H. Aktas & Oncu, 2006).  

Limitations of BANK NIZWA in Oman

Bank Nizwa is implementing the policies of the efficient market hypothesis in the stock market to increase the efficiency of the capital market. As it is used to increase the efficiency of the business but it has some negative points which could be faced by the business. It could be possible that all the requirements of the capital market may not be fulfilled by the investors which results in a deficiency in the market. If the assumptions are not fulfilled it may be the failure of all the plans, and it will result in the low efficiency of the capital market for the investors. If the capital market is going in low efficiency it may be a reduction in the investment (G. Yen & Lee, 2008).

Conclusion of BANK NIZWA in Oman

After the analysis of all the tasks which are about the capital market and efficient market hypothesis in the investment market, it is concluded that the capital market needs high efficiency in the investment market in the share of Nizwa Bank. The researcher also concludes that macroeconomic variables also draw an impact on capital markets such as the stock market. An increase in interest rate changes investors' response towards interest-bearing securities and bonds. While the change in the market value of shares is also a turning point for investors regarding a particular listed company on Muscat stock exchange.    

References of BANK NIZWA in Oman

Al-Habsi, M., & Al-Amri, K. (2017). Examining the weak form of market efficiency risk: evidence from muscat security market financial index sector. International Journal of Management and Applied Science, 3(3), 60-67.

G. Yen, & Lee, C. F. (2008). Efficient market hypothesis (EMH): past, present, and future. Review of Pacific Basin Financial Markets and Policies, 11(02), 305-329.

H. Aktas & Oncu, S. (2006). The stock market reaction to extreme events: the evidence from Turkey. International Research Journal of Finance and Economics, 6(6), 78-85.

S. Al-Muharrami. (2015). The interest rate in Oman: is it fair?. Humanomics, 31(3), 330-343.

V. Arora, Nravichandran, D. R., & Jain, D. R. (2011). The dimensionality of service quality and its critical predictors to customer satisfaction in Indian retail banking. International Journal of Multidisciplinary Research, 1(5), 1-11.