Evaluating the role of financial safety indicators in predicting financial risks for a sample of Iraqi banks listed on the Iraqi Stock Exchange for the period from 2010-2022
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Abstract
The study aims to evaluate and analyze the role of financial safety indicators as precautionary methods and procedures for predicting financial risks، which are (credit risks، market risks، and operational risks) to which banks may be exposed as a warning before they occur in order to manage them and reduce their severity، targeting a sample of private banks listed in The Iraqi Stock Exchange for the period from 2010-2022. A set of indicators، models and statistical methods were used، relying on the EXCEL program. The study reached a set of results and conclusions، the most important of which was the presence of a role for financial safety indicators، which are (asset quality، liquidity and market risk sensitivity index) only. Out of eight indicators for predicting credit risk، only five indicators out of the eight financial safety indicators have a role (capital adequacy، return on assets، return on equity، profitability and market risk sensitivity index) that can predict market risks، as well as a role for three indicators. Among the eight indicators، which is the index (return on assets، return on equity، and profitability index)، it can predict operational risks. The study also found that one indicator had a role in influencing the outputs of the KIDA model for predicting combined financial risks، which is the liquidity index، noting that this model was It was previously applied to Rafidain Bank and was used in this study to prove the possibility of applying it to private banks. The study came out with a number of recommendations that can be applied to manage these risks.
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