Overview

Original Research

THE ROLE OF FINANCIAL ANALYSIS IN FORECASTING LIQUIDITY RISK

AMJED HAMID SHUKR AL AMERI 1, and ATHEER ABBAS ABADI 2.

Vol 17, No 11 ( 2022 )   |  DOI: 10.5281/zenodo.7313737   |   Author Affiliation: Department of Financial and Banking Sciences, Faculty of Administration and Economics, Iraqi University, Baghdad, Iraq 1,2.   |   Licensing: CC 4.0   |   Pg no: 348-364   |   To cite: AMJED HAMID SHUKR AL AMERI, and ATHEER ABBAS ABADI. (2022). THE ROLE OF FINANCIAL ANALYSIS IN FORECASTING LIQUIDITY RISK. 17(11), 348–364. https://doi.org/10.5281/zenodo.7313737   |   Published on: 11-11-2022

Abstract

The current research was concerned with studying the role of financial analysis in predicting liquidity risks. The study sample was represented by 6 banks listed in the Iraqi Stock Exchange. The study was conducted during the period from 2010 to 2017, and the study relied on the financial ratios for measuring liquidity risk. The study concluded that the liquidity ratio for the North Bank was gradually increasing, especially the ratio of current assets to current liabilities, which formed a significant increase even in the years (2015-2016-2017), which are the years of failure for the bank. It also concluded that Al-Mansour Bank for Investment and Finance showed that the bank enjoys a good financial position. From the aspect of liquidity, it was at a very good level, as the ratio of current assets to total assets was high during those years. While the United Bank for Investment had high liquidity ratios even in the year in which the bank began to falter in 2017, but after looking at the bank’s financial statements, it was found that the bank’s liquid assets included some assets whose effectiveness is slow in meeting emergency obligations. It also concluded that the Assyrian Bank enjoys a strong financial position. On the side of liquidity, the bank has strong liquidity and is able to pay contingent and contingent obligations, as the ratio of current assets to current liabilities has gradually increased over the years of study. On the part of the Economy Bank, we found that the bank’s financial position was not in a good position, as the bank’s liquidity ratios were low, especially in the years of faltering that the bank went through in 2014 and 2017, where the ratio of current assets to current liabilities was modest, especially in the years of failure. Finally, the investment bank shows us that the bank enjoyed fairly good liquidity in the early years of the study years and was gradually heading to rise in the other years.

Keywords

Financial Analysis, Liquidity Risk.