The Impact of Capital Increase on Credit Risk: An Analytical Study of Banks Listed on the Iraq Stock Exchange

ABSTRACT : This study aims to explore the impact of the economic and political environment on the effectiveness of capital increases in reducing credit risk, and to analyze the influence of capital growth on banking stability and the extent to which it contributes to credit risk mitigation. The study sample consists of a group of banks listed on the Iraq Stock Exchange during the period from 2018 to 2023. The deductive analytical method was employed to analyze financial statements and assess the relationship between capital increase and credit risk. The study reached several important findings. Notably, some banks failed to manage credit risk effectively. Data revealed that in certain cases, an increase in capital was accompanied by a rise in risk levels, indicating an inverse relationship between the two variables. Although a few banks demonstrated slight improvement in risk management, it remained below the required standard—highlighting weaknesses in internal oversight, poor supervision, and insufficient adherence to corporate governance guidelines.