The impact of banking stress on the components of banking sustainability in Syria

Abstract

This research aimed to identify the degree of stress in Syrian banking sector and study its impact on the components of banking sustainability during the period from the first quarter of 2013 until the fourth quarter of 2022.

For this purpose, the descriptive approach was relied upon to cover the theoretical aspects, while the analytical approach was relied upon to determine the nature of the statistical relationship between banking stress and sustainability components in Syria. Due to the nature of the data and the degree of its stability; the Autoregressive Distributed Lag (ARDL) was used to study the practical side. The research concluded that the banking sector experienced a high level of stress between the first and third quarter of 2020. On other hand, the banking stress had a negative impact on the various components of banking sustainability in the long term, while it had a negative impact on the value-added index, the deposit growth rate, and the loan growth rate in short-term with differences degrees of lags, while it had a fluctuating effect (between positive and negative) on the return per share. Accordingly, the researcher recommends the necessity of the early detection of banking stress by  building indicators specific to the degree of stress in the financial sector as a whole, as well as building stress indicators at the micro level for each bank individually, in addition to the importance of striving towards achieving more disclosure and transparency for banks, which enhances trust between the bank and public; and reflects positively on sustainability in crisis periods.