The Causal Relationship between Banking Diversification and Capital Adequacy Analytical study in a sample of banks Listed in Iraq Stock Exchange For the period (2005-2019)

Abstract

The study aims to test the causal relationship between banking diversification and capital adequacy indicators according to Basel III standards. A sample of (10) banks was selected from the Iraqi private commercial banks for the period (2005-2019). The financial reports and statements published in the Iraqi Stock Exchange were relied on, and in order to measure the study variables, the researcher relied on the appropriate financial indicators and statistical equations. The problem of the study was embodied in the statement of the dialectical relationship between banking diversification and capital adequacy through a set of questions, in the light of which the basic hypotheses were formulated to achieve the goal of the study. This prompted the researcher to study it and find relationships between the study variables and come up with a result that contributes to clarifying the type of relationship by benefiting from the (Granger causality) method and the impact of independent variables, according to statistical tests that were used for this purpose and based on the statistical program (SPSS V.23). The study reached a set of results, the most important of which (there is no causal relationship between banking diversification and banking capital adequacy indicators for the sample banks and within the chosen time period). It clarifies to those interested in banking affairs and researchers that these variables, regardless of their relationships and effects, remain the budget process and finding an appropriate combination that is valid for all banks is a subject of controversy and discussion, and depends mainly on the existence of an efficient banking administration capable of achieving its goals in light of an appropriate environment subject to the implementation of the legislation of the Central Bank of Iraq.