The impact of owned capital on banking risk - a comparative study between the Jordanian Kuwait Bank and Al Rajhi Investment Bank

Abstract

The banking sector is considered one of the important sectors. It is the basic pillar of the financial system in any country due to its role in developing the country economically and socially and pushing the wheel of progress forward through obtaining funds from individuals and investing them in various fields. It is the most important source on which the bank depends as well. From other sources, such as deposits, it is the owned capital, which is considered the storehouse to which the bank resorts if it experiences crises or accidents due to its banking work, represented by various banking risks. Therefore, it works ready to confront any risks to which it is exposed by activating and diversifying its funding sources and diversifying its investments to reduce the degree of risk. In which. Therefore, the two researchers analyzed the owned capital by analyzing its indicators and banking risk by using its own standards. Then, the research tested the hypotheses through the use of the statistical indicator (ANOVA), which includes the (F) and (T) tests and the coefficient of determination (R2). The time limits of the research were between (2003 - 2006) and the most important conclusion was (that only two of the four proprietary capital adequacy ratios have a greater significant impact on Al Rajhi Investment Bank, while there is no significance for this impact on the risk ratios in the Bank of Jordan. Kuwaiti Bank, despite the parity of the two banks in capital adequacy ratios, with a clear increase in banking risk ratios in general for the first bank compared to the latter).
The most important thing that the researchers recommend is (the need to pay attention to and activate this financing source as well as other sources and diversify them to reduce the degree of risks to which the bank is exposed in the light of various environmental developments).