The Empact of Accounting Conservatism on The Relationship Between Operational Risks and Financial Stability An Applied Study on Banks Listed on The Damascus Securities Exchange

Abstract

This research aims to examine the relationship between operational risk and financial stability in banks listed on the Damascus Securities Exchange, test the impact of the interaction between operational risk and accounting conservatism on financial stability. The research sample consisted of 11 banks during the period from 2011 to 2023. The dependent variable was financial stability, measured using the Z-score, while the independent variable was operational risk, measured as the average total income over the last three years × 15%. The moderating variable was accounting conservatism, measured as the market/book value ratio. The control variable was bank size, measured using the natural logarithm of total assets. Using the ARDL model to measure the long-term and short-term impact, the results showed an inverse relationship between operational risk and the banks' long-term financial stability, and no relationship in the short term. The results also showed an inverse impact of the interaction between accounting conservatism and operational risk on the banks' long-term financial stability, and a non-significant positive impact of the interaction on short-term financial stability.