Financial flexibility of banks and its impact on enhancing risk-adjusted profitability
An analytical study of a sample of commercial banks listed on the Iraq Stock Exchange during the period 2005-2024
DOI:
https://doi.org/10.71207/ijas.v21i86.5031Keywords:
Financial flexibility, Financial leverage, financing gap ratio, risk-adjusted profitability.Abstract
This research aims to examine the impact of financial flexibility on enhancing risk-adjusted profitability for a sample of six commercial banks for the period 2005–2024. Financial flexibility was measured through a number of related indicators, such as leverage (using the debt ratio) and liquidity (using the funding gap ratio), while risk-adjusted profitability was measured using indicators (risk-adjusted return on assets and risk-adjusted return on equity). The research relied on data from the annual reports of the sample banks listed on the Iraq Stock Exchange, employing appropriate statistical methods using) Eviews v.12) & (Excel v.16) to test the research hypotheses. The research reached a set of results, the most important of which is the existence of a statistically significant effect of financial flexibility in enhancing risk-adjusted profitability. Based on the results, the research presented a set of recommendations, the most important of which is that bank management should use risk-adjusted profitability indicators as a tool to accurately assess profitability, which helps in making informed investment and financing decisions.
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Copyright (c) 2025 Abbas Abdulaali Kareem Al-Abboodi
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