Predicting the Financial Failure of Banks Using the Sherrod Model by Application in a Sample of Private Banks in Iraq

Abstract

The banking sector plays a vital role in promoting economic progress and stimulating growth and competition in any economy. The banking sector integrates with other sectors and contributes to feeding the economy in general. The banking sector forms part of the financial sector, which plays an important role in the economies of countries, as it invests capital and contracts vary widely.

This study focuses on the process of predicting financial failure for a sample of private banks in Iraq with the aim of clarifying the concept of financial failure and early prediction of its possibility, in addition to demonstrating the importance of the Sherrod model for financial failure by clarifying it and testing its suitability for measuring the possibility of financial failure occurring in private Iraqi banks. The researcher relied on both the descriptive approach and the analytical approach in the research approach.

The research community was represented by private commercial banks listed on the Iraq Stock Exchange, while the research sample was represented by the Bank of Baghdad and the United Investment Bank, and the Commercial Bank of Iraq.

Through the results obtained in this study, the calculated results of the Sherrod model for the Bank of Baghdad show that they are in a medium risk stage, and the calculated results of the Sherrod model for both the United Investment Bank and the Commercial Bank of Iraq show that they are in a very low risk stage.