The Role of Financial Analysis in Predicting Financial Distress in Iraqi Commercial Banks

Abstract

This research examines the role of financial analysis in predicting financial distress in Iraqi commercial
banks. It aims to explain how financial analysis can serve as an effective quantitative and qualitative tool for
forecasting financial distress to explain the role of financial analysis by presenting financial analysis as an effective
quantitative and qualitative tool for forecasting potential financial distress in commercial banks, through financial
indicators that help commercial banks detect potential weaknesses at an early stage and develop appropriate
corrective measures. In light of increasing financial risks and economic instability, particularly within the banking
sector, due to the continuous threats facing banks and the challenges related to their ability to meet financial
obligations. The importance of the research stems from the fact that financial distress is one of the most serious
problems facing the banking sector because of its negative impact on the stability of the banking and economic
system of the country as a whole. The research relied on the descriptive-analytical approach through the analysis
of the financial statements of a group of commercial banks through the use of a set of financial analysis indicators
and some models to predict financial distress. The research concludes that financial analysis represents an
important strategic tool for banks , not only for evaluating financial performance, but also for the early prediction
of financial distress and enhancing banking stability. It also emphasizes the importance of integrating traditional
methods of financial analysis with modern technologies to contribute to improving forecasting accuracy, reducing
financial risks, and enhancing banks' ability to sustain and achieve financial soundness.