Risk Management and Bank Performance in Morocco: An Empirical Analysis of Prudential and Operational Dimensions

Abstract

The pursuit of sustainable performance increasingly compels credit institutions to balance profitability objectives with escalating risk management demands. In this regard, risk management has evolved beyond a mere compliance exercise to become a strategic function: serving as a guiding force during planning, a regulatory mechanism throughout operations, and a means of ensuring adherence to prudential standards.

This study contributes to this evolving paradigm by examining the joint impact of prudential and operational risk management approaches on the financial performance of Moroccan banks. Based on a panel of six major commercial banks over the period 2010–2024, and employing an ARDL-PMG model, the analysis provides empirical evidence of a significant relationship between specific risk management levers, namely: operational risk, the cost of credit risk, and the loan-to-deposit (LTD) ratio, and bank profitability.

Conversely, conventional prudential indicators, such as the Tier 1 capital ratio and market risk-weighted assets, do not exert a direct influence on performance. These findings underscore the importance of an integrated approach, wherein proactive management of operational and liquidity risks becomes a central driver of value creation.

Keywords: Banking performance, Risk management, ARDL, Moroccan banks, Solvency, Prudential approach, Operational approach.

Paper type: Empirical research article 

JEL Classification : G21, G32, C33