Predicting financial failure under traditional models and financial safety indicators (Proposed model) - analytical research for a sample of Banks listed on Iraqi stock exchange

Abstract

Financial failure is an extremely dangerous phenomenon that many organizations face as a result of many factors, whether at the level of business units or at the level of economy. The situation becomes more serious with the banking sector, and this arises from the nature of banking work, which affects and is affected by many bodies, whether supervisory or Different stakeholders, as the banking sector suffers from its subjection to many regulatory bodies, whether at the local level represented by Central Bank or globally due to the Basel Agreement, and at the level of stakeholders it is required towards depositors to invest and develop their deposits and towards owners to provide levels of acceptable profit, All of this prompted the adoption of many indicators that guarantee the bank’s protection from any risks associated with its inability to pay its obligations. Accordingly, the current research presented a proposed model that has universal acceptance, known as financial soundness, which was employed with its four indicators: capital adequacy, asset quality, profitability, and liquidity. Giving weights based on the outputs of the genetic algorithm for the period from 2017-2022 for the Middle East Bank as a successful bank and for the Dar es Salaam Bank for the period 2012-2014 as a failed bank, and after testing the proposed model and comparing its results with the models of Altman, Sheerod, Kida, the research reached agreement on the results for the proposed model with typical Altman, sheerod.