Armed with deep pools of liquidity, many Middle Eastern banks are exploring new avenues of growth, from expanding their regional presence to concentrating on innovation within the Islamic finance sphere.

Efforts by the Kuwaiti government to boost the country’s sluggish economic growth have so far proven ineffective, leaving its banks to look towards the rest of the Middle East and north Africa for growth opportunities.

In an attempt to tighten its regulatory framework and instil greater confidence in investors, Kuwait’s parliament has approved its first independent capital markets regulator for the Kuwait Stock Exchange. Only time will tell if the move can resuscitate the market.

Kuwait's banks are struggling to recover from the significant losses made in 2008 and 2009, suffering with high levels of non-performing loans and a dearth of lending opportunities. The government's economic development plan was designed to both offer a lifeline to the banking sector and diversify the country's oil-reliant economy, but while banks are keen to get on board with the various projects, political indecision is slowing their progress.

Home to an estimated 9% of the world’s total oil reserves, Kuwait posted its 12th consecutive budget surplus of $18.9bn in 2011. But while the country's coffers are flush with cash, continued political infighting has stymied development, leaving the economy overly reliant on the oil sector and the country's basic infrastructure in need of improvement.

Now Kuwait has joined many other Gulf states in pushing through private financing across a range of sectors and overhauling its infrastructure, it boasts one of the Middle East's largest and most diverse public-private partnership programmes. But as the country's government opts for PPPs, will the banks follow?

Awash with liquidity, Kuwait's banks are struggling to find opportunities to deploy their capital. Implementation of the country's much-heralded $113bn Economic Development Plan is making slow progress amid parliamentary disputes, and banks remain wary of the beleaguered investment and real estate markets.

As political and social unrest spreads across many countries in the Middle East and north Africa, Kuwait – the Gulf region's only democracy – is making progress across many fields in a quiet and efficient manner.

Funding retirement presents a challenge for governments in the Middle East and north Africa because of the vast numbers of people who will reach retirement age in the next 40 years – but it also offers opportunities for financial services providers.

With a reputed $200bn under management, the Kuwait Investment Authority has been moving away from its traditional reliance on blue-chip stocks, but will its new enthusiasm for active investment pay off?