Banking Risk Analysis And Its Impact On Credit Capacity By The Altman Model

Applied study in a sample of banks registered in the Iraqi Stock

Exchange

For the period 2005-2017

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

Presented by

Simaa Hassan Mohammed Ali Al Shammari

Under the supervision of Assistant Professor

Dr. Zainab makee mahmood Albanaa

Abstract:

The aim of this study was to know the effect of banking risk in determining the credit capability. of the bank based on the Altman model. This study was conducted in the banking sector listed in the Iraqi Stock Exchange, The study sample included (11) banks represented in ((Bank of Baghdad, Bank of Babylon, Sumer Bank, Middle East Bank, Commercial Bank of Iraq, Commercial Bank of Iraq, Credit Bank, Al Ahli Bank, Iraqi Investment Bank, United Bank and Mosul Bank for Development and Investment) based on the availability of data for a time series extending from 2005 And until 2017. The study started from an intellectual problem that affects the impact of banking risk in determining the creditworthiness of banks. It is considered a vital subject that needs continuous follow-up and study of its great impact on the success of banking operations and continuity. The study used a range of financial means and statistical methods to achieve its objectives. In Kolmogorov-Smirnov, the data were found to be subject to normal distribution. The study also used the analysis of correlation and regression of the study variables and hypothesis testing using a set of statistical methods, (Pearson). In order to achieve the objectives of the study, key hypotheses have been formulated and tested using the SPSS program, The most important criteria used in the five indicators of the Altman model, two indicators for measuring the adequacy of capital and two indicators to measure the incidence of faltering. The study reached a number of conclusions, the most important of which is the lack of correlation and effect of statistical significance and moral between the banking risk and creditworthiness of banks, The study concluded with a number of recommendations, the most important of which was the need for the management of banks to use the old and modern hedging methods as well as the application of the Altman model to measure the banking risk and determine its impact credit capability.

key words / banking risk, credit risk, liquidity risk, market risk, operational risk, credit capability.