The Impact of Systemic Risks on the Financial Stability of Banks-An Applied Study on A Sample of Egyptian Banks during the Period 2018-2022

Document Type : Original Article

Authors

1 Arab Academy for Science, Technology and Maritime Transport The Egyptian Arabic Republic

2 Vice Dean of the College of Graduate Studies in Management, Arab Academy for Science, Technology and Maritime Transport The Egyptian Arabic Republic

3 Vice Dean of the College of Financial and Administrative Sciences Pharos University The Egyptian Arabic Republic

Abstract

The study aimed to analyze the impact of systemic risks on banking financial stability in the Arab Republic of Egypt - "An applied study on Egyptian banks." During the first quarter of 2018 until the fourth quarter of 2022 for 11 banks with a total of 220 views, the study relied on a multi-step regression analysis to test study assumptions, as well as a set of descriptive statistics to characterize the behavior of study variables. The study revealed a number of results, most notably: the moral impact of systemic risk indicators on financial stability as measured by the "Z-Score" index of Egyptian banks, where the adjusted determination factor was around 0.9936, and also the moral impact of systemic risk indicators on the financial stability of the bank portfolio risk measure (NPL) of Egyptian banks, where the adjusted determination factor was around 0.3583. The results of the statistical analysis showed that variables with moral impact on financial stability as measured by the index (Z-Score) of Egyptian banks are (exchange rate, loans granted to the private sector as a proportion of real GDP, market capital as a proportion of the top GDP, loan-to-deposit ratio, leverage (liability-to-equity ratio), value at risk, bank size, return rate on assets). While the variables with a moral impact on financial stability by bank portfolio risk measure (NPL) are (ratio of loans to deposits, value at risk, Crona pandemic, rate of return on assets). Based on the results of the study, a number of recommendations were made, the most important of which are that banks should increase investment in loans granted to customers because they have a positive impact on banks' financial stability. Working to raise capital in banks by relying on self-financing rather than the financing process on debt, as increasing leverage has a negative impact on Egypt's financial stability. The Central Bank of Egypt must develop a clear and effective strategy, as well as future plans to predict financial economic crises to ensure the efficiency of the Egyptian banking sector and promote financial and banking stability.

Keywords

Files

Share

How to cite

Statistics