Banking Solvency and Its Impact on Credit Risk: an Analytical Study of a Sample of the Iraqi Private Banking Sector
- Post by: Muthanna mjdes
- February 5, 2023
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Dr. Saad Majeed Al-Janabi 1* and Mr. Ahmed Hadir Abd2
1,2 *Al-Muthanna University / College of Administration and Economics / Department of Business
ABSTRACT
This research has dealt with an important aspect of the banking business, represented in banking solvency and credit risk. This work aims to analyze the extent of interaction between banking solvency and credit risk to know the nature of the relationship between them as well as know the ability of the research sample banks to pay long- and short-term obligations. This research assumes that bank solvency affects credit risks based on statistical and financial methods represented by financial ratios (for bank solvency and credit risk). The statistical program SPSS (V. 26) has been utilized to analyze the data. To know the effect of bank solvency on the credit risk of private commercial banks of the research sample, a sample of private Iraqi commercial banks listed in the Iraq Stock Exchange and consisting of (5) banks belonging to a community consisting of (43) banks for the period from (2011) to (2020) and after addressing the theoretical side of the research. Also, this study has presented the practical side to reach a set of conclusions. Thus, based on multiple linear regression, this research has found a significant effect of solvency indicators on credit risk. The researchers have recommended a set of recommendations to banks, and the research sample, including the conscious use of credit risk indicators by analyzing market trends and knowing interest rate changes. Also, the behavior and tastes of customers and the extent to which they avoid fluctuations in returns that the bank is likely to be exposed to. Moreover, this analysis can improve the bank’s work and use it to its advantage.
Keywords: Solvency , Return on Equity.
Muthanna Journal of Administrative and Economic Sciences, 2022,Volume 12, Issue 4, Pages 214-231
DOI: 10.52113/6/2022-12-4/214-231
