THE IMPACT OF CREDIT RISK ON BANKS FINANCIAL PERFORMANCE AND THE MODERATING ROLE OF GOVERNANCE LEVEL: A STUDY ON BANKS LISTED IN PALESTINE AND AMMAN STOCK EXCHANGE
جامعة النجاح الوطنية
This study aims to investigate the moderating role of Corporate Governance (CG) on the relationship between Credit Risk (CRs) and Financial Performance (FP) of banks listed in the Palestine Securities' Exchange (PEX) and Amman Securities' Exchange (ASE) between 2009 and 2019. The study sample comprised twenty-one banks distributed between the two stock exchanges. Secondary data, annual reports, and disclosures were used to analyze and draw conclusions and recommendations. A multiple linear regression model was used to deduce the effect of CRs on the performance of banks. Tobin's Q, Return on Assets (ROA), and Return on Equity (ROE) were used to measure the performance of banks. The ratio of Non-Performing Loans to total loans (NPLs) and loans to total assets (LTA) were used to measure CRs. CG was measured using an index based on the extent of literature and prevailing circumstances in the Palestinian and Jordanian environments. The regression results showed mixed results regarding the impact of CRs on the FP of banks. LTA has a significant and positive effect on TOBINS Q and ROE, but an insignificant and positive effect on ROA. On the other hand, NPLs has a significant and negative effect on ROA, whereas NPLs has a significant and positive effect on TOBINS Q. The findings stated that NPLs has an insignificant and positive effect on ROE. Moreover, the results demonstrated that CG moderated the relationship between CRs and FP of banks. This means that the high competence of CG rules decreases the negative effect of CRs on FP. In light of these results, the study suggests the following set of recommendations: importance of paying attention to bank loans; implementing more effective credit processes and banking policies; assuring that the credit of the potential borrower is appropriately assessed; Deconcentration of credit in particular sector; constant reviewing of CG codes and learning from the experiences of developed countries in corporate and bank governance; directing companies to pay attention to CG practices through laws and legislation that require companies to follow CG practices; and conducting workshops on CG and its significance in the presence of company management and decision-makers. Keywords: Credit Risk, Financial Performance, Corporate Governance, Palestine Securities' Exchange, Amman Securities' Exchange
This Thesis is Submitted in Partial Fulfillment of the Requirements for the Degree of Accounting, Faculty of Graduate Studies, An-Najah National University, Nablus, Palestine.
تَأثير المخاطر الائتمانية على الأداء المالي للبنوك والدور المعدل لمستوى الحوكمة: دراسة على البنوك المدرجة في بورصة فلسطين وعمان للأوراق المالية