Measuring and Analyzing the Impact of Banking Performance Indicators on Economic Growth in Iraq for the Period (2004-2023)
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Abstract
The banking sector is one of the main pillars of the national economy due to its vital role in mobilizing savings and directing them towards investments, which contributes to supporting economic activities and achieving economic growth. The efficiency of banks' performance is an important indicator of their contribution to economic growth, especially in developing countries. During the period (2004-2023), Iraq witnessed major economic transformations, accompanied by economic, political and security challenges that affected the efficiency of the banking sector's performance. The research aims to measure and analyze the impact of performance indicators of banks operating in Iraq on economic growth. To achieve the research objective, the standard analytical approach was adopted and the Autoregressive Distributed Lag (ARDL) model was used to conduct statistical and standard tests. A number of conclusions were reached, the most important of which are: The results of the Bound Test within the (ARDL) model indicated the existence of a long-term equilibrium relationship between the variables, as the F statistic value reached (15.601), which is greater than the upper limits of the critical values at significance levels of 1%, 5%, and 10%. There is an inverse and statistically significant relationship between the cash-to-assets ratio in the short and long terms and the economic growth rate, which is consistent with economic theory. Maintaining liquidity is to find profitable investment opportunities in the markets, and this reflects rational economic behavior that is consistent with the principle of alternative opportunity cost. Accordingly, directing cash liquidity towards investment activities represents one of the main drivers for enhancing economic growth in a developing economic environment. The relationship was directly proportional between the ratio of investments to deposits and the economic growth rate in the long term, and this is due to the maturity of investments and the beginning of the emergence of their positive effects on the economy, which leads to an improvement in economic growth rates. Among the most important proposals he reached: Increasing the efficiency of cash credit use by directing it towards productive sectors with high added value, such as the industrial, manufacturing, agricultural and technological sectors. In order to achieve the objectives of loans and advances, it is necessary to activate oversight mechanisms to evaluate loan and advance requests, ensuring their allocation to projects with real economic feasibility and the ability to repay.
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