The Role of Risk Management and Digital Transformation on Enhancing Banking Efficiency

Abstract

The current study examined the banking environment in the Iraqi banking sector through three important variables. These variables are risk management and digital transformation as independent variables, which are considered among the most prominent and important topics for banking institutions, and banking efficiency as the dependent variable, which is one of the most prominent goals banks seek to achieve. Therefore, the study aimed to demonstrate the relationship and impact of risk management and digital transformation in enhancing banking efficiency, in light of the contemporary challenges facing banks, especially with regard to economic fluctuations and increasing competitive pressures. The study focused on the main question: What is the impact of risk management and digital transformation in enhancing banking efficiency? The study assumed the existence of a correlation and influence between both risk management and digital transformation in enhancing banking efficiency. To achieve the study objectives, the study hypotheses were tested in the Iraqi banking sector in general, for a period of 14 years extending from 2010 to 2023. The study relied on annual data obtained from the statistical bulletin of the Central Bank of Iraq, which was employed in financial analysis and statistical analysis by using various statistical programs such as SPSS 26, multiple linear regression, analysis of variance (ANOVA), and the Durbin-Watson test. The study came out with a set of results, the most prominent of which is that the indicators of risk management and digital transformation contribute significantly to explaining changes in banking efficiency, as the model explains more than 83% of the variance in this variable.