The Role of Bank Capital Increases in ROA Profitability Indicator (An Analytical Study in the Commercial Bank of Baghdad)

Abstract

This research aims to analyze the role of increasing bank capital in enhancing the profitability index (ROA) of private Iraqi banks, focusing on the Baghdad Commercial Bank as a sample. Therefore, the main research question is: How effective is the capitalization strategy in enhancing the profitability index (ROA) of the Baghdad Commercial Bank? The main hypothesis is that the bank capital increase strategy (capitalization) plays an important role in enhancing the profitability index (ROA), which contributes to improving banking performance and achieving profits. This hypothesis was tested at Baghdad Bank, a commercial bank, for the period 2013-2023. To prove or disprove the aforementioned hypothesis, and to address the main research question, an analytical approach was adopted by analyzing the financial statements and annual reports of the bank, the research sample. The results showed a positive relationship between the bank capital increase strategy and the profitability index (ROA) of the Baghdad Commercial Bank, as good capitalization contributes to improving the efficiency of asset utilization and increasing returns. In conclusion, the researchers made recommendations, including the need for the senior management of the Commercial Bank of Baghdad to strengthen capital-raising strategies by enhancing asset utilization and improving operational efficiency.