Vol. 22 No. 3 (2022)
Published: 2022-09-15

Measuring and analysing the relationship between investment portfolio diversification and banking profitability using the path analysis model - an applied study in a sample of Iraqi private commercial banks for the period (2016-2020)

Afraa Abdulwhab Saeed Zangana , Asst, Prof. Dr. Ghufran Hatem Alwan

During the past years, the use of financial instruments in the management of investment portfolios witnessed a remarkable growth in the global markets with the need to diversify the performance of financial instruments strategies, as these strategies play the role of protection for financial investments and by adopting one of these strategies, the performance of investment portfolios can be improved and thus maximizing returns or reducing risks. By forming a portfolio that includes a mixture of securities with varying degrees of risk. Therefore, any negative impact that a particular investment tool may cause can be removed with a positive impact on another investment tool, and this will inevitably ensure a balanced return. Accordingly, the research aimed to show the effects achieved from diversifying the investment portfolio in Iraqi private banks (conservative and liberal ones) on the profits achieved. The research sample included (4) private Iraqi commercial banks, including the liberal and conservative in terms of their banking work and by relying on their annual financial statements. The research resulted in several results, the most important of which is that conservative banks do not seek to develop and diversify components Their investment portfolios and that their revenues are the main source of the foreign currency auction window, which reflects the policy of these banks to achieve quick profits through their investments that are not based on well-thought-out plans, while the liberal banks have proven to have a positive relationship between diversifying the investment portfolio and banking profitability in a relative way. This would reduce the negative impact of fluctuations in the exchange rate of the dinar against the dollar.

Pages: 1148-1170

Keywords: banking profitability, Iraqi private commercial banks

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