The impact of credit risk on the financial health indicators of banks (analytical study of JPMorgan and Citigroup banks for the period 2005-2019)

Abstract

This study dealt with credit risk by clarifying the concept and determinants of credit and how to manage credit risk. The study also dealt with the most important indicators of financial safety for banks, represented by (capital adequacy index, asset quality index, profitability index, and liquidity index) and how credit risks can affect On the indicators of financial soundness of banks. The study included two American banks, JPMorgan and Citigroup, and the statistical program Excel was used to measure the impact of each of the independent variables represented by credit risk on the dependent variable represented by indicators of financial safety. The most important conclusions reached by the study (bank credit contributes to making new investments to achieve the goals of economic development and more projects, which is linked to providing new job opportunities and an increase in profits, analysis of financial safety indicators helps policy makers and regulators banks to identify strengths and weaknesses in the financial system easily So that they can take preventive measures to avoid the crisis, and basic indicators are used to determine the potential weakness of banks that accept deposits. As for the most important recommendations (to determine credit risks and work on taking preventive measures to avoid crises in banks, it is necessary to use financial safety indicators, which are one of the most important indicators for predicting financial crises).