Abstract:

Purpose: The study aims to examine the impact of credit risk and liquidity risk on bank profitability in Egypt

Design/Methodology/ Approach: The study used annual data from a sample of 8 Egyptian banks registered in the EGX100 index between 2010 and 2022. The research methodology was built upon quantitative approach by collecting panel data (secondary data) for the assigned period to test the research hypotheses. The fixed effect and random effect analyses were used as the statistical tools to analyze the collected data.

Findings/ Originality/Value: Results revealed that credit and liquidity risks have significant negative effect on profitability measures in the period 2010 to 2022 in the Egyptian banking sector.

Recommendation: The negative impact of credit risk on bank profitability indicates that credit departments in banks need to study financing requests from customers in accordance with policies related to the feasibility study, which contributes to reducing the credit risks that affect the profitability of banks. Additionally, improving risk management systems and including more reliable information about liquidity measurements can help in predicting credit risk, and can be used as one way to help in managing both risks in banks.

Keywords: Credit risk, Liquidity risk, Bank profitability, EGX100 index, Panel data, Egypt.