The research investigates the impact of internal and external factors on credit risk of the Egyptian banking sector during periods of economic instability. Data of the listed banks are used for the sample period from 2012 to 2022. The study conducts a comparative analysis of Egypt's periods of economic instability, primarily focusing on the devaluation of the Egyptian currency. Thus, the studied periods are divided into two samples: the pre-devaluation period from 2012 to 2016 and the post-devaluation period from 2017 to 2022. The study employs an econometric technique that suits the dynamic nature of the estimated models, which is the system Generalized Method of Moments (GMM) to analyze the relationship between bank-specific factors and macroeconomic factors on bank credit risk. The results highlight a significant change in the determinants of credit risk post-devaluation, indicating the increased impact of external economic challenges. The study concludes that economic instability increases credit risk, with macroeconomic challenges influencing the sensitivity of credit risk to different factors. Key recommendations include the need for Egyptian banks to enhance their risk management strategies to better adapt to macroeconomic fluctuations, and the implied need to continuously improving regulatory frameworks in line with the Basel regulations.