Bahrain wins top marks from bankers for the quality of its regulators.
In its last visit to the kingdom, the IMF praised the "resilience" of Bahrain's financial sector and the strength of monitoring by the country's central bank, which also oversees the country's market regulation.
Regulation is thorough and implemented with enough input from the financial sector, said Mazin Manna, the chief executive of Citibank Bahrain.
"There's early preparation for new laws and regulations for laws that are to be sent out," he said.
"Banks have a lot of time to prepare themselves."
Banks in Bahrain began discussing the implementation of the Basel III regulations last year.
The country's regulators are responsive and also score highly for enforcement, Mr Manna added.
"The Central Bank of Bahrain has become much stronger in enforcing regulations, including issuing fines," he said.
"I'd say the detailed rule book that the central bank of Bahrain has and the enforcement of that rule book makes the environment in Bahrain very conducive."
Compared to rival centres in the Arabian Gulf, Bahrain's central bank also stands out for its detailed and timely statistical releases.
But the financial regulator's shortcomings are also apparent.
With little market liquidity, the kingdom's stock index has slumped steadily during the past few years.
The perceptions of the quality of the kingdom's regulation may have been soured by three bank failures during that period, including The International Banking Corporation and Awal Bank.
Concentrations of risk on the property sector remain high, at about a quarter of total lending by retail banks.
That is partially a quirk of Bahrain's specialisation in Islamic finance, which tends to back sukuk sales with property assets.
The kingdom is proud to boast world-leading capabilities in Sharia-compliant financing.
But Islamic finance is one area where it may face further challenges from the UAE, where the Central Bank has called for a unified Sharia board to further develop its sukuk market.