Mediating effect of risk management practices in Iraqi private banks financial performance

• Published in: Journal of financial services marketing 2023-06, Vol.28 (2), p.358-377
• Main Authors: Mahmood, Najat Shakir, Ahmed, Elsadig Musa
• Format: Article
• Language: English
• Subjects: Banking industry; Central banks; Credit risk; Economics and Finance; Employees; Finance; Financial Services; Hypotheses; International finance; Marketing; Original Article; Risk assessment; Risk management
• ISSN: 1363-0539; 1479-1846
• DOI: 10.1057/s41264-022-00155-y

This study examines the mediating effect of risk management practices on the relationship between understanding risk and management, risk identification, risk assessment analysis, risk monitoring, credit risk analysis, and financial performance. Besides, examined the relationship between risk-related factors and risk management practices, as well as examined how risk management practices affect financial performance in the Iraqi private banks. The population in this study comprised of employees currently working in private banks in Iraq and the unit of the analysis was the individual employees in the private Iraq banks across different departments. Quantitative method was used in order to collect data from current employees of Iraq private banks. Partially qualitative method has been used to gather more information that can’t be collected via quantitative method to support the study findings. Overall, the study hypotheses support that risk management practices play a mediating role in the relationship between risk-related factors and financial performance. Finally, the study found that an understanding of the constructs of risk-related factors is a prerequisite for better understanding of risk management practices in order to find out if there is an increase or decrease in financial performance of Iraqi private banks. These results further revealed that formation of a comprehensive risk management system is not only a useful practice to meet the regulatory requirements but an effective exercise to improve the performance of Iraqi banks in general and private banks in particular. This study contributes a new insight into applying risk management in public and private banks in Iraq and extends the existing theoretical literature in the field of banking industry by filling the gaps in this area.