The Effect of Banking Risk on the Accounting Return: An Analytical Study of the Commercial Bank of Iraq

Abstract

Purpose: The research aims to shed light on the banking risks to which banks are exposed, and the extent to which banks are able to cover and face these various risks, and what these risks can reflect in terms of achieving the accounting return. The research also aims to analyze the relationship between each of the banking risks and the return. Accounting through the use of financial indicators for both risk and return. Theoretical framework: for this research is the extent of the impact of banking risk on the banking return, so it is necessary to know the extent of the relationship between the degree of risk that the bank can bear and the amount of its impact on the return to be achieved, i. To be kept by banks to face banking risks. Method/design/approach: In this research, the use of financial indicators for each of the risks and returns and the use of models of complex qualitative equations are used to measure the relationship between some types of risks and accounting returns of the Commercial Bank of Iraq for the period from 2005 to 2006. Results and conclusion: The study showed that the indicators of efficiency and banking activity showed a rise in the returns achieved compared to the indicators of the accounting return, as the bank was keen to achieve good profits by exploiting the funds deposited with it in an excellent way that enabled it to obtain revenues. Results Implications: Credit risk indicators showed an increase in the amount of provision allocated to hedge against losses to face doubtful debts in the event of borrowers' failure or failure to pay them. The realized return of the bank. Originality / value: The analysis sheds light on the relationship between banking risk and bank return through the process of financial analysis that contributes to verifying the state of uncertainty and risk. Due to changes and developments in the world, the banking industry has witnessed at the present time a state of important changes as a result of the challenges facing banks with the intensification of competition, and among these challenges facing banks are banking risks.