The impact of banking risks on banking stability: an analytical study of a sample of private banks listed on the Iraq Stock Exchange for the period (2011-2023)

Abstract

This study demonstrates the impact of banking risks (credit risk and liquidity risk) on banking stability for a sample of banks listed on the Iraqi Stock Exchange. The study was conducted on three commercial banks on the Iraqi Stock Exchange for the period from 2011 to 2023: Ashur Bank, Bank of Baghdad, and Middle East Bank. The study relied on the annual financial statements of the sample banks. Financial indicators were used to measure liquidity risk (cash in banks / total deposits) and (loans and advances / total deposits). For credit risk, the indicator (loans / total assets) was used. The study concluded that a balance should be struck between banking stability and banking risks, as this is an important topic that banks must address. Analyzing banking risk indicators helps decision-makers identify strengths and weaknesses. It is essential for Iraqi banks to formulate strategies to mitigate the risks they are exposed to, maintain sufficient reserves to enable them to confront these risks, and guide the economic sector to the importance of the financial sector in mitigating credit risks