The causal relationship between banking diversification and capital adequacy and its impact on market value

Analytical  study in a sample of banks registered in the Iraqi Stock Exchange For the period (2005-2019)

To The board of the College of Administration and

Economics, Karbala University, in Partial Fulfillment of the

Requirements for PH.D. degree in Business Administration Department

by

Suadad Ali Abbed Al- Abbas

Supervised by 

Assistant Prof.Dr, Ali Ahmed Fares Prof.Dr. Ahmed Kazem

The aim  of study to test the causal relationship between banking diversification and capital adequacy indicators according to Basel III in the market value. A sample of (10) banks was selected from the Iraqi private commercial banks and for the period (2005-2019) it was relied on the financial reports and statements published in the Iraqi Stock Exchange and in order to measure the study variables based on the financial indicators and the appropriate statistical equations for them.

The problem of the study was embodied in the dialectical statement of the relationship between banking diversification and capital adequacy and its impact on the market value through a set of questions, in the light of which the basic hypotheses were formulated to achieve the goal of the study. The causal relationship between the study variables and their importance in the market value prompted the researcher to study it and find the relationships between the study variables and come up with a result that contributes to clarifying the type of relationship by making use of the (Granger causality) method and the effect of the independent variables on the dependent variable, according to statistical tests that were used for this purpose and based on the statistical program ( SPSS V.23 and the economic measurement program (Eviews 10) and using the (Panel Data) method based on (Pooled OLS) and (Fixed effects least square dummy variable (LSDV).

The study reached a set of results, the most important of which (there is no causal relationship between banking diversification and banking capital adequacy indicators for the sample banks and within the chosen time period). It clarifies to those interested in banking affairs and researchers that these three variables, regardless of their relationships and effects, remain the balancing process and finding an appropriate combination that is valid for all banks is a subject of controversy and discussion, and depends mainly on the existence of an efficient banking management capable of achieving market value for it in an appropriate environment subject to the implementation of the bank’s legislation Iraqi Central).
Keywords: banking diversification, capital adequacy, market value.