The Effect of the Credit Shock on the Capital Adequacy of Iraqi Private Banks

Abstract

The research aims to measure the credit shock and to know the extent to which Iraqi private banks are exposed to credit shocks, and to determine their impact on banking financial soundness represented by the capital adequacy index and determine the causal relationship between the credit shock and capital adequacy, and to estimate the impact of the credit shock on capital adequacy. Statistician (10EViews V.). The study community was represented by the Iraqi private banks Selection sample made of (10) Private banks listed on the Iraq Stock Exchange. This is for its contribution to the development economic, I tested the hypotheses of the study using the descriptive analytical method based on the annual reports of the study sample for the period (2012-2020). The short-term relationship showed that (36%) of the short-term errors can be corrected in the unit time represented by the year, to return to the equilibrium position in the long term and that the effect in the short term does not persist in the long term. Seven tests confirm the existence of a long-term co-integration relationship between the study variables at the level of significance (5%) for the individual segment and the general trend, which is the presence of co-integration.