Abstract
The aim of this paper is to investigate the relationship between
income structure (income from advances, investment income,
and fee income) of banks and insolvency risk in the banking
sector of Pakistan. The study used the data set for the period of
2007 to 2015. Furthermore, the study used a Random Effect
Model for data analysis after estimating multiple tests to
determine the appropriate model for data analysis. In view of
the results, the study shows mix results on the relationship
between income structure and insolvency risk. The relationship
between income from advances has an insignificant
relationship with insolvency risk, while investment income and
fee, commission and brokerage income are significantly related
to insolvency. The results depict that a higher share of
investment income decreases insolvency risk, while higher
involvement of bank in generating fee income decreases the
stability of bank and hence increases insolvency risk.
Shahzad Akhtar, Javed Iqbal, Noor Hayati Binti Ahmad, Moeed Ahmad Sandhu, Hassan Mujtaba Nawaz Saleem. (2018) Income Structure and Insolvency Risk: An Empirical Analysis of Banking Sector of Pakistan, Paradigms , Vol 12, Issue 2 .
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