The impact of some macroeconomic variables on banking stability in Iraq

Abstract

This research aims to test the impact of macroeconomic variables on banking stability by analyzing some macroeconomics in the Iraqi economy and to know the ability of the banking system to address the shocks that occur in the macroeconomic environment.

The results of the study showed that there is an inverse and moral relationship between the exchange rate and the banking stability index, and the existence of a direct and moral relationship between economic growth and the banking stability index, and the existence of an inverse and moral relationship between inflation and the banking stability index according to the logic of economic theory. The results of the study also showed that there is a weak relationship between the two variables, public spending, the interest rate and the banking stability index, according to the logic of economic theory. And the failure of the unemployment variable to affect the banking stability index according to the logic of economic theory.

The study also recommended stressing the Central Bank of the necessity of providing the necessary financial allocations in order to face emergency situations that may appear in the banking sector, such as the rise of non-performing loans, and the need to stress commercial banks by studying the creditworthiness of customers carefully for the purpose of granting credit and developing a sober plan to collect their overdue debts.