The Effectiveness of The Kida Model in Measuring Financial Failure Through Selected Financial Indicators Using Artificial Intelligence Tools: An Applied Study on Iraqi Commercial Banks (2018 – 2023)

  • Authors

    • Ahmed Adheem Alsaffar University of Babylon / College of Administration and Economics
    • Dr. Jawad Kadhim AL-Bakri University of Babylon / College of Administration and Economics
    https://doi.org/10.14419/che1y197

    Received date: June 9, 2025

    Accepted date: July 9, 2025

    Published date: July 15, 2025

  • Financial failure; Kida model; Iraqi banks; Financial indicators; Artificial intelligence

  • Abstract

    This study aims to assess the effectiveness of the Kida model in measuring the probability of financial failure in selected Iraqi commercial banks by analyzing the influence of a set of selected financial indicators. The study employed the Panel Autoregressive Distributed Lag (Panel ARDL) model, relying on four indicators that capture essential aspects of banking risk: (Capital Adequacy Ratio(CAR), Cash Liquidity Ratio(CLR), Non-Performing Loans ratio(NPL), and Credit Deployment Ratio(CDR). The empirical analysis covers a sample of three Iraqi commercial banks listed on the Iraq Stock Exchange, using quarterly data for the period 2018 - 2023. The findings reveal a statistically significant long-run relationship between the Kida index and the selected financial indicators, while the error correction term confirms a moderate speed of adjustment toward equilibrium following financial shocks. Considering the accelerating developments in artificial intelligence (AI), this study underscores the potential for integrating the Kida model into intelligent analytical systems capable of real-time monitoring and predictive assessment of financial distress, based on continuous and automated data feeding. Such an integration—leveraging machine learning algorithms (e.g., decision trees, neural networks) and real-time data processing platforms - could significantly enhance the ability of decision-makers to detect early signs of financial distress and respond more proactively. The study concludes that the Kida model, when aligned with critical financial indicators, serves as an effective tool for assessing financial risk. It recommends the periodic adoption of this approach within the Iraqi banking sector, while highlighting the future strategic role of AI in strengthening early-warning mechanisms and data-driven financial governance.

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  • How to Cite

    Alsaffar, A. A. ., & AL-Bakri, D. J. K. . (2025). The Effectiveness of The Kida Model in Measuring Financial Failure Through Selected Financial Indicators Using Artificial Intelligence Tools: An Applied Study on Iraqi Commercial Banks (2018 – 2023). International Journal of Accounting and Economics Studies, 12(3), 63-68. https://doi.org/10.14419/che1y197