The Impact of Financial Slack Indicators on the Level of Banking Safety

This study aims to analyze the impact of financial slack indicators through its dimensions, namely available financial slack, potential financial slack, and recoverable financial slack, on banking safety indicators, including capital adequacy, asset quality, profitability, and liquidity, in a sample of commercial banks listed on the Iraqi Stock Exchange for the period 2015-2021. The methodology used in this study involves a multiple regression model with the least squares approach, utilizing the Eviews-12 software. The results of the study indicate a significant relationship between financial slack indicators and banking safety, where an increase in financial slack generally corresponds to a decrease in banking safety levels. Specifically, capital adequacy is identified as the most crucial element in determining the level of banking safety. Additionally, the study finds that the liquidity ratios of the banks under investigation are relatively high, indicating the presence of idle financial resources that could be invested. Based on these findings, the study recommends improving the management of financial slack to enhance the safety and stability of the banking sector in Iraq.