The Impact of Credit Risk on the Financial Performance for the Period (2010-2020) An Empirical Study: The National Bank of Iraq as a Model
DOI:
https://doi.org/10.31272/jae.i138.1120Keywords:
credit risk, financial performance, National Bank of IraqAbstract
The banking sector is one of the important sectors, as it represents a major link in the development of the financial system in any country. The risks to which the banking sector is exposed have varied greatly, including credit risks, which result from this risk is the risk of customers not paying their obligations to the bank, and thus lead to exposure to the bank. To large losses as a result of bad debts and increased provisions for doubtful debts. Therefore, the research problem revolves around the question (what is the effect of credit risk on the financial performance of the National Bank of Iraq).
In order to achieve its objectives, the research starts with a hypothesis: If credit risks are identified and dealt with appropriately, the financial performance of the bank can be positively affected.
With the aim of reaching the goals that the bank seeks to achieve, the study is therefore divided into three axes: The first axis: is the conceptual framework for credit risk and financial performance. The second axis: an analysis of the course of developments in the activity of the National Bank of Iraq for the period (2010-2020). The third axis: measuring and analyzes the impact of the credit risk of the National Bank of Iraq on the financial performance for the period (2010-2020).
The research concluded with regard to banking indicators, that the bank, the research sample, showed clear reluctance with regard to the weak contribution of total deposits, total credit, and total assets to the gross domestic product on the one hand, and on the other hand, the weak contribution of the number of bank branches in providing banking services to the required number of the population.
The research recommended that the bank, the research sample, should make every effort to reduce credit risk and put in place modern systems capable of monitoring the processes of granting and collecting loans in order to support the investment environment and build a good credit policy, in addition to the need to focus on training credit risk managers and their attendance at local and international seminars working on Increase their knowledge in making the right decisions in granting credit.
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