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The Impact of Capital Risks on Financial Flexibility: A Study of a Sample of Banks Listed on the Iraq Stock Exchange for the Period 2018-2023 | ||
| AL-Qadisiyah Journal For Administrative and Economic sciences | ||
| Volume 28, Issue 1, April 2026, Pages 32-44 PDF (548.11 K) | ||
| Document Type: Research Paper | ||
| DOI: 10.33916/qjae.2026.013244 | ||
| Authors | ||
| Aqeel Shaker Al-Sharʿa; Hanaa Jasim Mohammed; Iftikhar Malik Rasheed | ||
| University of Al Qadisiyah | ||
| Abstract | ||
| The study aimed to analyze capital risks and financial flexibility, as well as to assess the impact of capital risks on the financial flexibility of the banks in the sample of the study. The study population represented the Iraq Stock Exchange, while the sample consisted of (8) banks listed on the Iraq Stock Exchange, with the objective of measuring the impact of banking risks on the financial flexibility adopted in the research for the banks in the sample for the period (2018-2023). Capital risk was defined as the likelihood of a bank experiencing unplanned or unforeseen losses, leading to fluctuations in cash flows, returns, and market value.This represents a deviation from planned opportunities, which reflects on the bank's financial indicators. Financial flexibility is considered the key indicator in the capital structure of the bank, indicating the bank's ability to generate financial resources in response to future events. Financial flexibility refers to unused or underutilized debt, meaning that a bank with an optimal long-term leverage ratio can utilize these resources when investment opportunities arise. Regarding the role of banking risks in financial flexibility, the study found that as capital risks increase, financial flexibility decreases. This means liquidity declines, and the bank’s ability to meet financial obligations and undertake expansions and investment growth decreases. To analyze and test the hypothesis of the study, the (SPSS 24) and (R-program) software were used, utilizing quarterly data for the period (2018-2023). The study concluded several findings, including a strong inverse correlation between capital risks and financial flexibility. A statistically significant relationship was found between capital risks and the financial flexibility of the banks in the sample, reflecting the relationship between the level of risks faced by the banks and their ability to adapt and respond to financial shocks, including economic crises and the ability to meet obligations without default. The study recommended tightening supervision by the Central Bank of Iraq on banks to ensure their compliance with risk management and the establishment of clear emergency plans to address financial crises. Furthermore, the study suggested developing early warning systems in Iraqi banks to monitor potential risks, such as capital risks, to enhance the financial flexibility of Iraqi banks. | ||
| Keywords | ||
| Capital Risks; Financial Flexibility | ||
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