The impact of using financial ratios and sustainable development indicators in predicting the financial failure of a sample of Iraqi banks listed on the Iraq Stock Exchange

The study aimed to determine the extent to which financial ratios and sustainable development indicators can predict financial failure in the banks included in the sample. To this end, the study sought to build a model for predicting financial failure by demonstrating the role of financial ratios and sustainable development indicators in enhancing the accuracy of financial failure predictions. A consistent sample of banks listed on the Iraq Stock Exchange was selected, consisting of twenty banks; ten of which do not suffer from financial failure, and ten that do. To identify the banks experiencing financial failure, reports issued by the Central Bank of Iraq regarding the performance of banks and the enforcement of guardianship on failing banks were utilized, as well as records of continuous losses and penalties imposed by the Central Bank and the Iraq Stock Exchange. Sustainable development indicators were measured according to the Global Reporting Initiative (GRI) indicators, while 21 financial ratios were utilized. The researcher employed discriminant and factor analysis using the SPSS program to measure variables, build the proposed model, and test the hypotheses. The study concluded that the combination of financial ratios and sustainable development indicators demonstrates a high predictive capability for financial failure, showing a clear distinction between the model based on financial ratios and sustainable development indicators compared to the model based solely on financial ratios and those built separately on financial ratios and sustainable development indicators. Furthermore, the level of sustainable development indicators for Iraqi banks listed in the market was found to be high, indicating an increased rate of reporting on sustainable development. The study recommended that the Iraq Stock Exchange should prioritize the sustainability of banks by establishing a legislative framework that obliges banks to report on sustainable development according to the standards of the Global Reporting Initiative (GRI).