BANK CREDITS AND THEIR ROLE IN FINANCIAL SUSTAINABILITY - A STUDY AT THE NATIONAL BANK OF IRAQ (2014-2023)

Abstract

The financial performance of the banks is of significant importance for the managers, shareholders, investors, and the general public across the globe. The research aims to analyse the impact of credit policy on financial safety in the National Bank of Iraq over the 2014 to 2023 period. For this purpose,  time series data is collected from the official financial reports issued by the bank and published on the official website of the Iraq Stock Exchange. The credit policy was measured by the cash and contractual credit growth rates, and the financial safety index was calculated by combining different indicators using the Bankometer model. The study's findings indicated that credit policy is inversely related to financial safety, indicating that the bank's expansion in granting credit may negatively affect the financial safety index of the bank. Based on the findings, the study recommends that policymakers emphasise financial safety and make it the ultimate goal of the bank by focusing on its sub-indicators, especially the capital adequacy index and the bad debt provision, as they represent the first line of defence to confront credit risks.