International Journal of Entrepreneurship (Print ISSN: 1099-9264; Online ISSN: 1939-4675)

Abstract

The Role of Financial Sustainability to Reduce the Financial Crisis, Through the Interactive Role of the Strategic Scenario: An Analytical Study in the Sector of Commercial Banks Listed in the Iraq Stock Exchange

Author(s): Ammar Nazar Mustafa Al-Dirawi, Qasim Mohammed Dahash

Iraq is an oil dependent economy, and country 90 percent revenue is coming from the export of oil. The recent volatility in oil prices has adversely affected the economic growth of Iraq. The prime objective of the current study is to explore the impact of financial sustainability on financial crisis. In addition to that, we have also investigated the indirect and direct impact of strategic scenarios such as portfolio diversification strategies on the financial crisis. The financial crisis is measured as the growth in real gross domestic product. Whereas, the financial sustainability is measured as an index of profitability, liquidity, and efficiency, the diversification to loan, non-interest income, and investment are taken as proxies of strategic scenarios. The ordinary least square, and hierarchical regression method is used to achieve the research objectives of the current study. The results of the study have shown a great deal of agreement with the hypothesized result. The financial sustainability has significant positive impact on economic growth of Iraq. Similarly, the concentration to loan, and diversification investment has significant positive impact on economic growth. Where is the diversification non-interest income having significant negative impact on economic growth? The 26 banks out of total listed banks are the final sample of the study. Data of eight years from 2008 to 2017 is taken form the annual reports and world bank data base. The findings of the study will be helpful for the practitioners, researchers and policy makers in understanding the role of financial sustainability and strategic scenarios of banks in fostering the economic growth.