Analysis of the relationship of internal and external determinants to profitability and their impact on banking stability according to the perspective of Basel III
An analytical study of a sample of Iraqi private banks listed in the Iraqi Stock Exchange for the period (2005-2020)
A thesis submitted to the Board of the College of Administration and Economics, University of Karbala – which is part of the requirements for obtaining the degree of Doctor of Philosophy in of Financial and Banking Sciences
From
Lamyaa Ali Ibrahim Almousawi
With supervision by
Assistant Professor Dr.
Ali Ahmed Faris
Abstract
The study sought to shed light on some of the basic cognitive and philosophical aspects related to the variables of the study, as the study problem was embodied in the analysis and presentation of the relationship of internal and external determinants and their impact on banking stability through of Profitability Indicators and Basel III, through a set of questions through which the hypotheses of the study were formulated to indicate the impact of testing And the contribution of the relationship of internal determinants with its indicators (Bank Size, Capital Adequacy, Asset Quality, Asset Management, Quality Of Management, Financial Risks) and external determinants, so its indicators (Inflation, Gross Domestic Product, Exchange Rate, Interest Rate Risk) as independent variables in Iraqi banking stability using The (Z-Score) indicator as a dependent variable, and mediating the relationship is the intermediate variables represented by the profitability with its indicators (The rate of Return on Deposits, The rate of Return on Equity) and Basel III ratios with their indicators (The Liquidity Coverage Ratio (LCR), The Net Stable Funding Ratio (NSFR). And The Study adopted in the practical aspect on the published financial reports and statements of a sample of Iraqi private banks represented by (Baghdad, Iraqi Commercial, Iraqi Middle East Of Investment, The Iraqi Investment, the United for Investment, the Iraqi National, the Iraqi Credit, Sumer Commercial, Gulf Commercial, Mosul for Development and Investment) listed on the Iraq Stock Exchange, as well as the data published in the annual economic reports issued by the Department of Statistics and Research of the Central Bank of Iraq, which It was selected depending on the availability of data during the study period for a time series that extended for (16 years) (2005 – 2020). To show the most suitable for the variables and sample of the study according to (Hausman) test, using the statistical program (Eviews V.12), The study used structural equation models using the Path Analysis method for the purpose of testing the effect of independent variables on the dependent variable across intermediate variables, and knowing the nature of the indirect effect. Among the variables, test their significance and indicate their overall effect, and through statistical analysis using the program (Amos V.24)in addition to a set of statistical programs (Excel, SPSS), The study also reached a set of conclusions, the most important of which is that the results of the study showed that the internal and external determinants directly affect banking stability with the possibility of indirect influence on it through profitability indicators and Basel III indicators, with the exception of the ratio of net stable financing, which did not have an indirect effect, and the recommendations of this study came to the need for banks to The Iraqi sample of the study on the need to support the statistical results of the study by the absence of an indirect effect of internal and external determinants on banking stability through the stable net financing ratio indicator, with the need for it to maintain reasonable rates of liquidity to face the possibility of its inability to meet its short-term financial obligations when due to the lack of the necessary funding It should not exaggerate its retention of its negative effects on bank returns and reduce profitability to benefit from these results in making appropriate decisions.
Key Words: – Profitability, Banking Stability, Basel III, Internal Determinants of Profitability, External Determinants of Profitability, Commercial Banks
