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

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.