Browsing by Author "ALSULMI, FATIMA"

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IMPACT OF BANK-SPECIFIC AND MACROECONOMIC FACTORS ON THE FINANCIAL STABILITY OF BANKS IN GULF COOPERATION COUNCIL COUNTRIES VIA CORPORATE GOVERNANCE
(Universiti Putra Malaysia, 2025-05) ALSULMI, FATIMA; Rosli, Mahmood
This study examined the bank’s financial stability based on internal factors (bank specific factors) and external factors (macroeconomic factors). Furthermore, this study examined the moderating role of corporate governance (board size, board meeting frequency, and CEO duality) between bank-specific and macroeconomic factors. The bank’s financial stability was measured by the z-score as an accounting measurement and Distance to Default as a market measurement. The analysis focused on a sample of listed banks in the Gulf Cooperation Council (GCC) region from 2014 to 2022 using STATA software. The results were based on the dynamic panel estimator of the two-step system Generalised Method of Moments (GMM). The findings suggested that credit risk had a significant effect, liquidity risk had no significant effect on the bank’s financial stability, and operational risk negatively affected it. Income diversification and capital adequacy positively impacted the bank’s financial stability. Regarding macroeconomic factors, oil prices contributed positively to banks’ financial stability. Gross Domestic Product (GDP) and interest rates negatively influenced the bank’s financial stability, while inflation had a mixed effect: positive on bank z-score but negative on bank Distance to Default. The COVID-19 pandemic showed a significant negative effect on the bank z-score and a positive effect on bank Distance to Default. The moderating effect findings highlighted that board size and meeting frequency mostly had a negative moderating effect between bank-specific factors and the bank’s financial stability. Meanwhile, CEO duality showed both negative and positive moderating effects. The analysis of the moderating role between macroeconomic factors and the bank’s financial stability showed that board size and meetings had a moderating role. In contrast, CEO duality only moderated the relationship between macroeconomic factors and bank Distance to Default. These findings suggest important implications for bank governance and stability in the GCC region.
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