Financial Sector in Palestine

There are many businesses, institutions and companies operating in the financial sector in the West Bank and Gaza Strip. These include the monetary authority and general banks that have risen in number to a total of 20. These include non-banking financial institutions including the Palestinian Capital Market Authority for securities, 9 private companies and financial centres as well as 10 insurance companies. The added value generated from financial establishments in both the banking and non-banking sides saw continuous growth, reaching US$342.2 million in 2008,[37] a 34% increase from 2006.


With the establishment of the PNA in 1994, the Palestinian Monetary Authority (PMA) emerged, accompanied by the opportunity to open the Palestinian banking sector once again after a blockade that extended since 1967. Since then, the number of banks has been regularly increasing, reaching 19 banks with 209 branches and offices at the end of the first quarter of 2010, among them 9 local banks and 10 foreign banks. Among the foreign banks, 8 are Jordanian, one is Egyptian and one is owned by HSBC. Also, 2 Islamic banks operate in the West Bank and Gaza Strip.

Banking activity since 1994 has increased in total value, with public deposits reaching US$6.3 billion in 2009, and the total value reaching US$2.2 billion at the end of 2009. Figure 2 below shows the growth of credit facilities from 1997 until 2009. The ratio of loans to private sector deposits is low in the West Bank and Gaza in comparison with neighbouring countries. The growth in public deposits in 2009 was accompanied by a clear growth in lending. The percentage of credit to total lending facilities lending went up from 61% in 2008 to 69% at the end 2009. This increase was at the expense of the debit account which fell during the same period from 38% to 30%.

Figure 2: Credit Facilities in 1997-2009, in Million Dollars

Figure 2 Credit Facilities in 1997-2009

Source: MAS (2010) Economic and Social Monitor

There is no national currency and so three different currencies are widely used in the West Bank and Gaza Strip; the Israeli Shekel in daily financial transactions, and the Jordanian Dinar and U.S. Dollar in savings and investments and for the purchase of durable goods. It is possible to make deposits and withdrawals from banks in any of these three currencies (see the following table).

Banks Operating in West Bank and Gaza at the End of 2009

1 Bank Name Founded The number of branches Office Address/Regional
2 Jordan Kuwait Bank 1995 2 Ramallah – Almaref Street
3 Arab Islamic Bank 1995 7 Al-Bireh – Nablus Street
4 Palestine Islamic Bank 1995 13 Ramallah – Jerusalem Street
5 Ahli Bank 1995 5 Ramallah – Zahra Street
6 Jordan Commercial Bank 1994 5 Ramallah – Street Almanara
7 Commercial Bank of Palestine 1994 5 Ramallah District, Qaddura – Alawda Street
8 Arab Bank 1994 14 Ramallah District, Masyoun – Grand Park Hotel Street
9 Arab Palestinian Investment Bank 1996 1 Ramallah, Ramallah Al-Tahta
10 Egyptian Arab Land Bank 1994 4 Ramallah – Jerusalem Street
11 Union Bank 1995 1 Ramallah – Downtown – Albareed Street
12 Bank of Jordan 1994 10 Al-Bireh – Nablus Street
13 Palestinian Investment Bank 1995 7 Ramallah District, Al-Nahda – Alhlal Street
14 The Housing Bank for Trade and Finance 1995 12 Ramallah – Albareed Street
15 Al Rafah Bank 2006 3 Ramallah – Al-Ersal
16 Cairo Amman Bank 1986 18 Ramallah – Masyon – Al-Maahed Street
17 Al Quds Bank 1995 11 Ramallah – Main Street
18 Palestine International Bank 1996 3 Al-Bireh – District Sbeha – Ras Al-Tahona
19 Bank of Palestine PLC 1960 66 Ramallah, Ein Misbah – Old Al – Mahkama Street
20 HSBC Bank 1998 1 Ramallah – Jaffa Street


The small loans and microfinance market made notable developments in 2008 and 2009. The total value of loans reached US$48.5 million in 2008 and US$51.9 million in Q1 2009, as compared to US$39.6, US$38 and US$32.3 million in 2005, 2006 and 2007 respectively. Note that this data refers to 9 credit organizations. Currently, there are 12 establishments offering these services.

In 2002, a network was established to regulate the small loans and microfinance market, named ‘Sharaka’. This network aims to empower the service providers to promote their work and facilitate access to their services for SMEs, as well as low income beneficiaries. The members of this network are: the Palestine for Credit and Development (FATEN), the Palestinian Businesswomen’s Association (Asala), The Palestinian Agricultural Relief Committees (PARC), American Near East Refugee Aid (ANERA), the Department of Micro Financing, the United Nations Relief and Works Agency (UNRWA), the Arab Centre for Agricultural Development (ACAD), the Cooperative Housing Foundation (CHF)(RIADA), the Palestinian Development Fund (PDF), The Young Men’s Christian Association (YMCA), and Caritas Jerusalem (The Holy Land).

Average Size of Small and Medium Loans in Palestine 2005-2009

2005 2006 2007 2008 2009
Average Loan Size ($US) 1352 1526 1569 2261 2397
Average Loan Size / GNI per Capita (%) 89 102.5 104.9 147.6 154.6
Return on Portfolio (%) 13.5 12.1 11.5 17.1 19.4

To support this vital sector, the Palestinian Cabinet decided to delegate the responsibility of regulating this sector to the Palestinian Monetary Authority and the latter has started to provide its services to advance this sector including a system for a background check on borrowers. The indicators report issued by “Sharaka” on 30 September 2009 showed a marked increase in credit at a 6% increase in the average of the first 3 quarters of 2009 compared to 2008.

A survey conducted by the company “Planet Finance” revealed that 79% of those surveyed in the West Bank are interested in borrowing to expand their existing businesses, 45% wish to begin a new business and 49% want to finance assets. For the Gaza Strip the figures were 43%, 8% and 6% respectively in the same year. The number of small loan customers and microfinance clients is 133,890 in the West Bank and 69,660 in the Gaza Strip with a total 203,550 during that year.


The insurance industry in Palestine began working after the establishment of the PNA and was enhanced after the foundation of the Palestinian Capital Market Authority, which is the regulatory agency for the insurance sector. In 2008, the insurance sector in Palestine achieved 28% growth in comparison with the previous year.[38] However, there still remain significant opportunities for development. The number of insurance companies operating in the West Bank and Gaza Strip has increased from 1 in 1993 to 9 today (see the table below). However, these companies are unable to completely cover the Palestinian market, so the insurance sector in the West Bank and Gaza Strip is still in need of expansion, development and increased investment.

Insurance Companies Operating in the West Bank and Gaza

Name of the Insurance Company Types of Insurance Year of Establishment Number of Branches Address of Main Office/ Regional Office
Arab Life and Accident Insurance Company Health, accidents, fire and property , marine, life 1995 7 Ramallah – Al-Quds Street next to the Esso Gas Station
Almashreq Insurance Company Health, accidents, fire and property , marine, life 1992 10 Al-Bireh – Im Sharayet, near Yellow Pages
Palestine Insurance Company Health, accidents, fire and property, marine, life 1994 6 Al-Bireh – Im Sharayet, near Yellow Pages
American Life Insurance Company Health, life 1996 3 Ramallah – Al-Mughtaribein Square, Central Building
National Insurance Company Health, accidents, fire and property, marine, life 1993 8 Al-Bireh – Al-Bireh Municipality Street, Abraj Building
Trust International Insurance Company Description 1994 12 Al-Bireh – Al Quds Street, Trust Building
Al Ahlia Insurance Group Health, accidents, fire and property, marine 1994 13 Ramallah – Masyoun, Behind the Jordanian Embassy
Al Takaful Palestinian Insurance Company Health, accidents, fire and property, marine 2008 4 Al-Bireh, Jerusalem Street, Al- Sheikh Building
Palestine Mortgage and Housing Corp Real Estate Mortgage 1997 2 Ramallah – Jerusalem Street

Source: The Palestinian Capital Markets Authority: www.pcma.ps


The PSE saw stable returns in 2007, 2008 and 2009, even during the global market crisis that intensified from Q4 2008 and resulted in a huge drop in value. Despite this, investors managed to avoid significant losses. In 2009, the Al Quds index fell by 17.3%, considered to be relatively low in comparison to losses suffered by financial markets in other countries. This is indicative of the relative stability of the Palestinian financial market due to its limited integration with global markets.

Al-Quds Index Value in 1997-2009 (Points)
Source: Website of the Palestine Securities Exchange www.pse.com

39 companies were listed on the PSE at the end of 2009 distributed as follows according to sector: the banking sector (7 companies), the insurance sector (5 companies), the investment sector (8 companies), the service sector (9 companies) and the industrial sector (10 companies).