The Impact of Financial Risks on Financial Performance Evidence from Egyptian listed banks

Assem, Manar; Abouzaid, Ahmed S.; ElSherif, Marwa

doi:10.21608/caf.2025.457684

The Impact of Financial Risks on Financial Performance Evidence from Egyptian listed banks

المؤلفون

¹ College of Business Administration, Arab Academy for Science, Technology & Maritime Transport , Egypt

² Eastern Illinois University, USA.Adjunct Faculty, American University in Cairo, Egypt.

³ Professor of Economics, Arab Academy for Science, Technology & Maritime Transport, Egypt.

10.21608/caf.2025.457684

المستخلص

This study explores the relationship between financial risks and bank profitability in Egypt, focusing on eleven publicly listed commercial banks from 2008 to 2023. Utilizing panel data models estimated in STATA 15, the analysis examines both bank-specific and macroeconomic determinants of performance, measured by return on assets (ROA) and return on equity (ROE). The dataset combines quarterly financial reports with country-level indicators from Euromonitor International and Trading Economics. Special attention is given to systemic events such as the Arab Spring, currency devaluations, and the COVID-19 pandemic. The results indicate that Egyptian banks exhibited resilience to these shocks. Capitalization positively influences ROA but negatively affects ROE, reflecting a leverage-related trade-off. Liquidity risk, operational inefficiency, and weak financial structure are found to be associated with lower profitability, while bank size and interest rates contribute positively. Macroeconomic variables—credit risk, inflation, economic growth, and money supply expansion—also significantly affect profitability. The findings highlight the dominant role of bank-specific factors over external conditions and provide policy insights for enhancing financial stability in emerging banking sectors.

الكلمات الرئيسية