The Impact of Market risk and Operational Risk on the Bank’s Reputation An Analytical Study of a Selected Sample of Commercial Banks Listed on the Iraq Stock Exchange during the Period 2005-2023

Abstract

This study aims to analyze the impact of market and operational risks on the reputation of a sample of Iraqi commercial banks listed on the Iraq Stock Exchange during the period 2005–2023. Market risk was measured using the Value at Risk (VaR) ratio, operational risk using the operating expenses-to-operating revenues ratio, and bank reputation using the market-to-book value ratio. The study sample included nine banks: Bank of Baghdad, Commercial Bank of Iraq, Investment Bank, Middle East Bank, National Bank of Iraq, Credit Bank, Sumer Commercial Bank, Gulf Bank, and Bank of Mosul. Multiple regression analysis was conducted using panel data and the EViews statistical software version 12, employing both a pooled regression model with fixed effects and a random effects model. The Hausmann test results indicated that the random effects model was the most suitable for analyzing the relationship between the variables. The study concluded that the comprehensive risk model is effective and statistically significant in predicting bank reputation. Market risk showed a significant negative impact due to the market's direct sensitivity to price fluctuations, while the impact of operational risk was minimal due to the containment of internal imbalances. The study recommended that banks adopt effective supervisory and procedural policies and risk management strategies to support and enhance their banking reputation.