IMPACT OF CAPITAL ADEQUACY TO REDUCE CREDIT RISK

Abstract

lie in the weak banking performance of commercial banks because they suffer from difficulty in determining the size of capital and its ideal adequacy that will achieve profits and help them stabilize and avoid risks as a result of the alignment between the bank’s assets and its liabilities. The outcome of this study aims to define the impact of capital adequacy on the credit risks of commercial banks, as the data was originally collected from the banks. and analyzed it using a multiple regression model. After testing the study hypothesis, the second researcher concluded that there was no statistically significant effect of capital adequacy ratios on credit risks. At the conclusion of the study, the researcher recommended a set of recommendations, most notably the need to strive to increase the attention of Iraqi commercial banks. By raising the financial suitability ratios of banks in order to create a kind of balance and protection from the various banking risks that the bank may face in light of the current crisis and the need to focus on reducing the percentage of net loan burdens in them, in order to confront the competitive challenges imposed by the nature of economic openness.