The role of strategic choice in the relationship between banking competition and financial performance

Applied study in a sample of  commercial banks Listed in the Iraqi Stock Exchange

For the period 2005-2021

To The Council of the College of Administration and

Economics, Karbala University, in Partial Fulfillment of the

Requirements for Master’s degree in Finance and Banking

by

ATHRAA Mohammed Mashmul Alsaaeidi

Supervised by  pro.Dr.

Zainab makee mahmood Albanaa

Abstract:

The study aims to know the extent of the impact of banking competition on financial performance through the strategic choice, as the study dealt with the commercial banks listed in the Iraq Stock Exchange, in which (13) banks were chosen for a time series that extended (17) years (2005-2021), which are (Bank of Baghdad, Bank of The Iraqi National Bank, the Commercial Bank, the Middle East Bank, the United Bank, the Iraqi Investment Bank, the Credit Bank, the Gulf Commercial Bank, the Mosul Bank for Development and Investment, the Sumer Bank, the Union Bank, the Bank of Babel, the Economy Bank for Investment and Finance), depending on the reports published in the market Iraq Securities The study applied the Hirschman Index (HHI) to measure banking competition, including (concentration of deposits) and financial performance indicators represented by profitability and liquidity (rate of return on assets and cash balance ratio) and indicators of strategic choice represented by (capitalization, credit risk, diversification of assets, efficiency) The study was used Analysis of the panel data in order to choose the appropriate model and indicate its appropriateness for the variables of the study sample according to the Hausman test. The study relied on structural equations models to test the effect of independent variables on the dependent variable through the intermediate variables to know the nature of the indirect effect between the variables and to know the level of their significance and to indicate the overall effect of them.

The study reached a set of results, the most important of which is that there is weak competition between the commercial banks, the study sample, due to the presence of large concentrations of deposits, which leads to a general perception of the lack of diversification in the private banking sector, which may expose it to high risks that may cause bankruptcy and insolvency in the future. Then the study concluded with a set of recommendations, the most important of which is the need to provide modern methods and electronic technologies in private commercial banks in order to keep pace with the tremendous innovations and to confront developments that may occur in the banking environment to encourage competition between banks.

Keywords: banking competition, strategic choice, financial performance.