scholarly journals The Effect of Liquidity Risk and Credit Risk on the Bank Performance: Empirical Evidence from Iraq

2021 ◽  
Vol 3 (1) ◽  
pp. 58-67
Author(s):  
Noor Hashim Mohammed Al-Husainy ◽  
Hamid Mohsin Jadah
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Fixed Effects ◽  
Stock Exchange ◽  
Liquidity Risk ◽  
Bank Performance ◽  
Bank Profitability ◽  
Dynamic Panel Model ◽  
Credit Risks ◽  
Generalized Methods Of Moments

The main objective of this paper is to study the effect of liquidity risk and credit risk on the profitability of commercial banks in Iraq. The sample is 18 private commercial banks listed in Iraqi Stock Exchange for six years for the period 2010 to 2020. This paper especially focuses on Iraqi commercial private Banks. The dependent variable is bank performance is measured by return on asset (ROA) and independent variables are, liquidity risks, credit risks. This paper employs a dynamic panel model, using Generalized Methods of Moments (GMM) panel data regression of Fixed-effects models. Furthermore, the findings illustrate that liquidity risk has a positive significant association with bank profitability. Meanwhile, credit risk has an adverse significant association with bank profitability. This paper contributes to the debate of risk management as well as determinants of bank performance from several dimensions. First, this study is the first to investigate the impacts of liquidity risks on bank performance in Iraq. Secondly, this is the first study that investigates the impacts of credit risks on bank performance in Iraq. It is hoped that the result of this paper can fill the gap of the literature on the association between liquidity risks, credit risks, and bank performance.

Examining the Relationship Between Banking Competition and Solvency, Liquidity and Credit Risks in Pakistan

2020 ◽  
Vol 4 (1) ◽  
pp. 29-52
Author(s):  
Sheikh Muhammad Umer Farooq ◽  
Muhammad Zubair Mumtaz
Keyword(s):  
Credit Risk ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Banking Industry ◽  
Liquidity Risk ◽  
Foreign Banks ◽  
Banking Competition ◽  
Credit Risks ◽  
Private Banks ◽  
The Relationship

This study empirically examines the relationship between the banking competition and the risks faced by the financial sector (i.e. solvency, liquidity, and credit risks) considering 31 banks for the period 2001 to 2018. Banks are further sub-divided into three categories i.e. state-owned banks, foreign banks, and private/commercial banks. The results reveal that Pakistan’s banking industry is relatively elastic and an increase in competition is directly associated with solvency risk, liquidity risk and credit risk of financial institutions and these findings corroborate the competition fragility theory. Besides, state-owned banks have a lesser probability to cope with solvency risk, however, foreign banks appear to face the least liquidity risk whereas private banks appear to face the least credit risk among the entire cluster.

scholarly journals Pengaruh Internet Banking, Risiko Kredit dan Ukuran Perusahaan Terhadap Kinerja Keuangan Perbankan Yang Terdaftar Di Bursa Efek Indonesia Periode 2017 - 2019

2020 ◽  
Vol 4 (1) ◽  
pp. 166-177
Author(s):  
Siska Wulandari ◽  
Nunuk Novitasari
Keyword(s):  
Linear Regression ◽  
Credit Risk ◽  
Commercial Banks ◽  
Stock Exchange ◽  
Internet Banking ◽  
Bank Performance ◽  
Company Size ◽  
Use Of Internet ◽  
The Relationship ◽  
Positive Effect

The purpose of this study is to view, analyze, and test the relationship between internet banking and bank performance. The banks used are those listed on the Indonesia Stock Exchange (IDX) in 2019. The method is Multiple Linear Regression by adding two control variables, namely credit risk measured by the NPL ratio and company size measured by the log of total assets with ROA as a measure of the Bank's performance. The findings of this study indicate that internet banking has a positive effect on ROA. The use of internet banking can increase ROA. Commercial banks play a big role in changing (growing) the economy of each country. NPL has a negative and significant effect on ROA. This means that it illustrates an inverse comparison between credit risk and bank performance. If credit risk increases, it will reduce ROA. Company size has a negative and insignificant effect on ROA, it is suspected that the cause is that large assets are not necessarily supported by good management. Company size cannot be used as a guarantee that large companies have good performance, large companies, of course, the costs incurred are also large. resulting in lowering ROA.

scholarly journals DETERMINANTS OF BANK PROFITABILITY IN A DEVELOPING ECONOMY: EMPIRICAL EVIDENCE FROM BANGLADESH

2009 ◽  
Vol 10 (3) ◽  
pp. 207-217 ◽  
Author(s):  
Fadzlan Sufian ◽  
Muzafar Shah Habibullah
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Negative Impact ◽  
Negative Relationship ◽  
Bank Performance ◽  
Developing Economy ◽  
Bank Profitability ◽  
Macroeconomic Indicators ◽  
Interest Margins ◽  
The Impact

This study seeks to examine the performance of 37 Bangladeshi commercial banks between 1997 and 2004. The empirical findings of this study suggest that bank specific characteristics, in particular loans intensity, credit risk, and cost have positive and significant impacts on bank performance, while non‐interest income exhibits negative relationship with bank profitability. During the period under study the results suggest that the impact of size is not uniform across the various measures employed. The empirical findings suggest that size has a negative impact on return on average equity (ROAE), while the opposite is true for return on average assets (ROAA) and net interest margins (NIM). As for the impact of macroeconomic indicators, we conclude that the variables have no significant impact on bank profitability, except for inflation which has a negative relationship with Bangladeshi banks profitability.

scholarly journals The effect of internal risks on the performance of Jordanian commercial banks

Accounting ◽  
2021 ◽  
Vol 7 (7) ◽  
pp. 1819-1824 ◽  
Author(s):  
Ahmad Alkhazali ◽  
Ghaith N. Al-Eitan ◽  
Hayel Al-serhan ◽  
Tareq O. Bani-Khalid ◽  
Ahmad A. Al-Naimi
Keyword(s):  
Credit Risk ◽  
Financial Performance ◽  
Commercial Banks ◽  
Stock Exchange ◽  
Liquidity Risk ◽  
Negative Influence ◽  
Financial Leverage ◽  
Additional Risk ◽  
Future Studies ◽  
Amman Stock Exchange

This study mainly aimed to examine the effect of internal risks on the financial performance of the Jordanian commercial banks. The study sample comprised the entire commercial banks that are included in the Amman Stock Exchange (ASE) spanning the period from 2009 to 2019. The study formulated four hypotheses, which are related to the effects of liquidity risk and leverage risk on the bank’s performance, proxied by ROA and ROE. Based on the results, liquidity risk did not have a significant effect on both ROA and ROE, while leverage risk did not have a significant effect on ROA, but it did on ROE. It can thus be concluded that the use of financial leverage should be taken into consideration because of its negative influence on the banks’ financial performance, specifically on the shareholders’ returns. It is recommended that future studies examine the effect of additional risk types, like credit risk and operational risk on the performance of banks.

scholarly journals Implementation of Basel II and Profitability of Banks in Pakistan

2019 ◽  
Vol 1 (1) ◽  
pp. 24-34
Author(s):  
Muhammad Ramzan Sajid ◽  
◽  
Hassan Mujtaba Nawaz Saleem ◽  
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Regression Model ◽  
Commercial Banks ◽  
Random Effect ◽  
Liquidity Risk ◽  
Basel Ii ◽  
Annual Reports ◽  
Bank Profitability ◽  
The Impact

This study examines the impact of credit risk and liquidity risk on the profitability of the banks in Pakistan before and after the implementation of the Basel II policy in Pakistani Banks. For this purpose, five private commercial banks of Pakistan selected as the sample of our study. The balanced panel data of these banks for ten years (2006-2015) is used to analyze the model. The data is collected from the annual reports of the selected banks. The impact of pre and post-Basel-II policy implementation is also measured using four years (2006-2009) as pre-Basel-II and six years (2010-2015) as post-Basel-II to compare the impact of Basel-II implementation in the banks. The regression model estimation technique is used, which is selected based on the unit root test. The fixed effect and random effect models are used based on the Hausman test to estimate profitability determinants. The models are applied in three phases as the whole period, pre-Basel-II, and post-Basel-II implementation period. Further studies could be developed by adding more variables to the regression model to check their impact on bank profitability. The sample size can be increased to all commercial banks, and further, this study can also be discussed in Islamic banking and microfinance institutions. Further, the dependent variables could also be increased to enhance the results of bank profitability. The number of observations could be improved to describe the risk management more prudent than this. The study suggests that banks have to follow strategies that provide adequate diversification in credit risk and liquidity risk management to mitigate these risks and enhance the profitability. It is further recommended that adopting a sound risk management system and strong corporate governance will reduce the credit risk and liquidity risk and ultimately improve the profitability of banks in Pakistan.

scholarly journals The Relationship of Credit Risk to Liquidity and its Reflection in Achieving the Profitability Target

2017 ◽  
Vol 1 (1) ◽  
pp. 38-59
Author(s):  
Alaa Farhan Talib ◽  
Saadi Ahmed Hamid ◽  
Sabah Hassan Abd AlAkeil
Keyword(s):  
Credit Risk ◽  
Strong Correlation ◽  
Commercial Banks ◽  
Liquidity Risk ◽  
Financial Ratios ◽  
Bank Profitability ◽  
Relationship Of ◽  
The Relationship

This study attempts to show the relationship between the credit risk in liquidity and the reflection of that relationship in achieving the goal of banking profitability. A group of financial ratios was used for the sample banks to conduct the analysis. The study included a sample of Iraqi commercial banks for the period 2011-2015. There is a strong correlation between the two variables (credit and liquidity risk) and a reflection of that relationship also in achieving the goal of bank profitability.

Bank Liquidity Risk and Performance

2018 ◽  
Vol 21 (01) ◽  
pp. 1850007 ◽  
Author(s):  
Yi-Kai Chen ◽  
Chung-Hua Shen ◽  
Lanfeng Kao ◽  
Chuan-Yi Yeh
Keyword(s):  
Commercial Banks ◽  
Liquidity Risk ◽  
Bank Performance ◽  
Alternative Measure ◽  
External Funding ◽  
Bank Profitability ◽  
Macroeconomic Factors ◽  
Advanced Economies ◽  
Interest Margins ◽  
And Performance

This study employs an alternative measure of liquidity risk to investigate its determinants by using an unbalanced panel dataset of commercial banks in 12 advanced economies over the period 1994–2006. Dependence on liquid assets for external funding, supervisory and regulatory factors, and macroeconomic factors are all determinants of liquidity risk. Because of higher funding costs for obtaining liquidity, liquidity risk is regarded as a discount for bank profitability, yet liquidity risk shows a premium on bank performance in terms of banks’ net interest margins. Liquidity risk has reverse impacts on bank performance in a market-based financial system.

scholarly journals The Effect of Risks on Banking Safety: Applied Study on Jordanian Traditional Banks (2005-2016)

2017 ◽  
Vol 9 (9) ◽  
pp. 102
Author(s):  
Mohammad Abdel Mohsen Al-Afeef ◽  
Atallah Hassan Al-Ta'ani
Keyword(s):  
Interest Rate ◽  
Credit Risk ◽  
Commercial Banks ◽  
Banking Sector ◽  
Liquidity Risk ◽  
Interest Rate Risk ◽  
Bank Credit ◽  
Applied Study ◽  
Rate Risk ◽  
The Impact

Banking sector is one of the most important sectors that support the sustainable economic development in Jordan, therefore this study aimed to test the impact of risks; (Liquidity risk, bank credit risk and interest rate risk) on the safety in the banking sector in the Jordanian commercial banks during the period 2005-2016.The results of the study showed that there is a statistically significant impact for each of liquidity risk and interest rate risk on the safety in the banking sector, and there isn't statistically significant impact for credit risk on the safety in the banking sector during the period of this study, and also find that the explanatory of model was 60.5%, which means that 39.5% due to other factors.

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