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Financial fragility of banks, ownership structure and income diversification: Empirical evidence from the GCC region

Dawood Ashraf, Mohamed Ramady and Khalid Albinali

Research in International Business and Finance, 2016, vol. 38, issue C, 56-68

Abstract: This paper investigates the role that ownership structure and diversification of income plays in the financial stability of banks from the GCC region. We find evidence that suggests that higher concentration of ownership in any type of shareholding is associated with higher insolvency risk. However, this higher insolvency risk is not associated with any specific type of shareholders. Higher financial fragility is also associated with the size and whether the bank is an Islamic bank. Banks engaged in substantial fee-based activities are more financially stable as compared with banks that predominantly generate their incomes from traditional intermediation activities.

Keywords: Emerging markets; GCC; Banks; Financial stability; Ownership structure; Income diversification (search for similar items in EconPapers)
JEL-codes: G21 G28 G32 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1016/j.ribaf.2016.03.010

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