Diversification and bank stability in the GCC
Nedal Al-Fayoumi and
Philip Molyneux ()
Journal of International Financial Markets, Institutions and Money, 2018, vol. 57, issue C, 17-43
This study examines bank diversification strategies and links to financial sector stability. Using a sample of listed and unlisted banks operating in the Gulf Cooperation Council (GCC) countries over 2001 to 2014 we investigate the diversification features of conventional and Islamic banks. Our main finding overall is that income or asset diversification does not enhance bank stability. However, there is evidence of a non-linear relationship between non-interest (non-financing) income and stability indicating that banks are able to reduce risk at higher levels of diversification. Conventional banks appear to be more adversely impacted on the risk side than Islamic banks. We also find that factors such as improved institutional quality, macroeconomic conditions, and other bank-specific factors motivate greater stability.
Keywords: GCC; Diversification; Stability; Islamic banking (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:57:y:2018:i:c:p:17-43
Access Statistics for this article
Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely
More articles in Journal of International Financial Markets, Institutions and Money from Elsevier
Bibliographic data for series maintained by Haili He ().