A Comparative Analytical Study of a Sample of Banks Listed in The Iraq Stock Exchange for The Period 2007-2024

A dissertation submitted by

Ahmed Hussein Ahmed Al-mussawi 

To the Council of the College of Administration and Economics / University of Karbala

This is part of the requirements for obtaining a PhD in Business Administration

Supervised by

Prof. Dr. Ali Ahmed Faris Al-Kaabi

Prof. Dr. Abdul Hussein Jassim Mohammed Al-Asadi

This study aimed to analyze the effect of investment diversification on the stock returns of commercial banks, while examining the mediating role of financial recovery within the Iraqi banking environment, which is characterized by high levels of risk and volatility in financial performance. The study was motivated by a central research problem represented by the limited empirical evidence explaining the transmission mechanism through which the impact of investment diversification is reflected in stock returns via financial recovery indicators, particularly in banks operating within the Iraqi market.

The study relied on a sample comprising ten commercial banks listed on the Iraq Stock Exchange over the period from 2007 to 2024, based on financial data obtained from the annual financial reports of these banks. Investment diversification was measured using the Gini–Hirschman Index, while financial recovery was assessed through the X-Score model. Stock returns were calculated in accordance with the approved market-based indicators. To analyze the relationships among the study variables, a set of statistical and econometric methods was employed, including descriptive tests, regression models, and mediation analysis using panel data techniques, with the aid of statistical and analytical software such as Excel, EViews, and AMOS.

The significance of the study lies in providing empirical evidence from the Iraqi banking environment that clarifies the mechanism through which investment diversification affects stock returns via financial recovery. This contributes to supporting investment and managerial decision-making within banks and for investors, and enhances the understanding of the relationship between investment diversification and stock returns in the Iraqi financial market in general and the banking sector in particular.

The study reached a number of conclusions, most notably that financial recovery mediates the relationship between diversification and equity returns, and plays a mediating role in strengthening this relationship. Accordingly, the impact of investment diversification on stock returns does not occur directly, but rather through improvements in financial indicators and the bank’s ability to restore its financial balance.

Keywords: 

Diversification of Investment, Financial Recovery, Stock Returns, Jenny-Hirschman Index, X-Score Model.

A Comparative Analytical Study of a Sample of Banks Listed in The Iraq Stock Exchange for The Period 2007-2024

A dissertation submitted by

Ahmed Hussein Ahmed Al-mussawi 

To the Council of the College of Administration and Economics / University of Karbala

This is part of the requirements for obtaining a PhD in Business Administration

Supervised by

Prof. Dr. Ali Ahmed Faris Al-Kaabi

Prof. Dr. Abdul Hussein Jassim Mohammed Al-Asadi

This study aimed to analyze the effect of investment diversification on the stock returns of commercial banks, while examining the mediating role of financial recovery within the Iraqi banking environment, which is characterized by high levels of risk and volatility in financial performance. The study was motivated by a central research problem represented by the limited empirical evidence explaining the transmission mechanism through which the impact of investment diversification is reflected in stock returns via financial recovery indicators, particularly in banks operating within the Iraqi market.

The study relied on a sample comprising ten commercial banks listed on the Iraq Stock Exchange over the period from 2007 to 2024, based on financial data obtained from the annual financial reports of these banks. Investment diversification was measured using the Gini–Hirschman Index, while financial recovery was assessed through the X-Score model. Stock returns were calculated in accordance with the approved market-based indicators. To analyze the relationships among the study variables, a set of statistical and econometric methods was employed, including descriptive tests, regression models, and mediation analysis using panel data techniques, with the aid of statistical and analytical software such as Excel, EViews, and AMOS.

The significance of the study lies in providing empirical evidence from the Iraqi banking environment that clarifies the mechanism through which investment diversification affects stock returns via financial recovery. This contributes to supporting investment and managerial decision-making within banks and for investors, and enhances the understanding of the relationship between investment diversification and stock returns in the Iraqi financial market in general and the banking sector in particular.

The study reached a number of conclusions, most notably that financial recovery mediates the relationship between diversification and equity returns, and plays a mediating role in strengthening this relationship. Accordingly, the impact of investment diversification on stock returns does not occur directly, but rather through improvements in financial indicators and the bank’s ability to restore its financial balance.

Keywords: 

Diversification of Investment, Financial Recovery, Stock Returns, Jenny-Hirschman Index, X-Score Model.