The Relationship between Financial Flexibility and Banking Efficiency: Application Study at Iraqi Private Banks
DOI:
https://doi.org/10.51173/tjms.v1i1.7Keywords:
Banking Efficiency, Bankruptcy Prediction, Capital Structure, Sustainable Finance, Economic CrisesAbstract
This study aims to investigate the effect of financial flexibility on rising banking efficiency in private Iraqi banks listed by the Iraqi Securities Commission (ISC). Financial flexibility refers to the bank's ability to grow and remain in the financial markets during sudden economic crises. Whereas banking efficiency demonstrates the bank's ability to use its available resources to achieve profits while providing high-quality banking services. In total, five Private Iraqi Banks listed within the ISC were selected that achieve the research objectives. The study problem reveals whether the selected banks have greater financial flexibility that contributes to improving overall their performance. The official annual reports published were approved by ISC for the period 2011-2020. Accordingly, quantitative statistical analysis methods were used in addition to financial analysis standards in order to prove the extent of the impact of financial flexibility variables in increasing the banking efficiency of the selected banks. The most important indicators measure the ratios of total liabilities, total assets, equity, liquidity ratio, return ratio, capital ratio, deposits, and loan ratio. The important conclusion indicated that the liabilities-to-assets ratio indicator reflects a close and stable level for the selected banks within the study period. This proves that the selected banks have financial flexibility in deploying funds. Accordingly, this study contributes by providing valuable insights to both financial institutions and policy-makers to promote a more flexible and efficient banking sector.
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