The Impact of Financial Fragility on Indicators of Financial Recovery: An Analytical Study of a Sample of Commercial Banks Listed on the Abu Dhabi and Dubai Stock Exchanges

Abstract

The research aims to build a knowledge framework for the topics of financial fragility and financial recovery as well as to measure and analyze each of them, and the research attempts to identify the impact of financial fragility on the financial recovery indicators of the UAE commercial banks, the research sample for the period (2011-2020), and the research used the (Z-score) model to measure Financial fragility and indicators (cash balance ratio, rate of return on deposits, suitability of capital for loans and advances, and suitability of capital for total deposits) to measure financial recovery to prove its hypotheses. The sample included (10) UAE commercial banks listed on the Abu Dhabi and Dubai stock exchanges, and the research covered (10) years from 2011 to 2020, and in order to achieve the objectives of the research and prove its hypotheses, the descriptive and analytical approach was relied on, and in conclusion, the research concluded a number of conclusions and recommendations. It is evidence of a decrease in financial fragility and access to financial stability, and the opposite occurs in the case of a decrease in the value of the (Z-score) indicator. The decrease in the value of the (Z-score) indicator indicates financial instability and falling into financial fragility, and that there is a relationship between As a measure between financial fragility (X) and the cash balance ratio (Y1) in the long and short term, the results also showed that there is a direct relationship between financial fragility (X) and the rate of return on deposits (Y2) in the long and short term, while the relationship between financial fragility (X) The adequacy of capital for loans and advances (Y3) was a positive relationship in the long term, while the relationship in the short term between financial fragility (X) and the adequacy of capital for loans and advances (Y3) was inverse, and the results also showed a positive relationship between financial fragility (X). The suitability of capital to total deposits (Y4) in the long term and in the short term is an inverse relationship between financial fragility (X) and the suitability of capital to total deposits (Y4). Because it is related to the state of financial instability, with the need to educate the UAE commercial banks about the importance of indicators of financial recovery and keenness to achieve them because they maintain financial health and make the banks in a good position.