Determinants of financial stability: an empirical study of commercial banks listed in Muscat Security Market

This study aims to explain the factors that have an effect on financial banking stability measured by Z-score as determinants of all six banks listed in MSM of Oman over the period 2008 to 2014. The four factors used are bank specific factor measured by income diversity and size of bank, banking sector measured by concentration in market and P/E ratio, macroeconomics factor measured by inflation and gross demotic product growth and external governance measured by size of government and regulation. This study used OLS regression analysis and shows there is a significant impact of income diversity variable and P/E ratio. Multiple regressions shows only specific bank and banking sector factors are significant. Finally, all independent factors are statistical impact on financial banking stability. The researcher recommends is to build system for detection of risks in the banking sector to maintain financial banking stability and mitigate the power crises.