Detecting Credit Risk in Egyptian Banks: Does Machine Learning Matter?

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Vydáno v:Ekonomika vol. 104, no. 2 (2025), p. 78-95
Hlavní autor: Abdou, Doaa M Salman
Další autoři: Farag, Karim, Ali, Loubna
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Vilniaus Universiteto Leidykla
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100 1 |a Abdou, Doaa M Salman  |u Department of Economics, Faculty of Management Sciences, October University for Modern Sciences and Arts, Cairo, Egypt 
245 1 |a Detecting Credit Risk in Egyptian Banks: Does Machine Learning Matter? 
260 |b Vilniaus Universiteto Leidykla  |c 2025 
513 |a Journal Article 
520 3 |a This study aims to significantly enhance the predictive modeling of credit risk within Egypt's banking sector, particularly by differentiating between retail and corporate credit risks and categorizing banks into listed and non-listed groups. By utilizing a comprehensive dataset from Middle Eastern countries spanning 2011 to 2023, the research applies advanced machine learning techniques, including the Random Forest algorithm, to refine the predictive model. The novelty of this research lies in its detailed exploration of credit risk determinants specific to the Egyptian banking sector, providing valuable insights into emerging economies. A distinction between various types of credit risk and bank classifications is made. The findings reveal that bank-specific factors - such as the asset size, the operating efficiency, the liquidity, the income diversification, and the capital adequacy - are more significant predictors of credit risk than macroeconomic indicators. This trend holds for both listed and non-listed banks, thus highlighting the importance of internal metrics. Moreover, the Random Forest algorithm demonstrates a high accuracy rate in predicting credit risk exposures, which underscores the effectiveness of machine learning in financial settings. The analysis indicates that variations in the asset size, operating efficiency, and other characteristics are crucial in influencing retail and corporate credit risks. These insights suggest that prioritizing internal bank metrics could lead to more effective credit risk management strategies than relying solely on external economic conditions. Ultimately, this study's predictive model is expected to enhance credit risk assessment capabilities, strengthening the financial positions of banks and fostering economic growth in the region. By bridging the gap between theoretical understanding and practical application, this research offers a novel perspective on credit risk management tailored to the unique context of the Egyptian banking sector. 
651 4 |a Egypt 
653 |a Credit 
653 |a Risk management 
653 |a Economic conditions 
653 |a Banking industry 
653 |a Algorithms 
653 |a Credit risk 
653 |a Models 
653 |a Economic growth 
653 |a Risk assessment 
653 |a Bank reserves 
653 |a Assets 
653 |a Macroeconomics 
653 |a Prediction models 
653 |a Diversification 
653 |a Predictions 
653 |a Regulatory reform 
653 |a Prioritizing 
653 |a Banking 
653 |a Research 
653 |a Capital 
653 |a Machine learning 
653 |a Research applications 
700 1 |a Farag, Karim  |u Faculty of Economics and Business Administration, Berlin School of Business and Innovation (BSBI), Germany 
700 1 |a Ali, Loubna  |u Faculty of Economics and Business Administration, Berlin School of Business and Innovation (BSBI), Germany 
773 0 |t Ekonomika  |g vol. 104, no. 2 (2025), p. 78-95 
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