Measuring the Impact of Financial Liberalization Indicators on the Performance of the Banking Sector in Iraq for the period (2005 – 2022)

Abstract

The research aims to demonstrate the measurement of the impact of financial liberalization on some banking performance indicators in Iraq through a quantitative and analytical reading of all variables and determining the type and extent of the relationship. The research relied on annual and quarterly data for the period from 2005 to 2022. Using advanced standard methods and approaches from unit root tests and multinomial joint integration of the ARDL model, in addition to identifying the characteristics of the time series of these variables, the stationarity tests, the joint integration test, the vector error correction model (VECM), as well as the Granger Causality test and variance decomposition analysis were applied. The results of the vector error correction model for the relationship between financial liberalization and banking performance indicators showed a long-term relationship with a direct effect of the interest margin (IM) on bank deposits / M2 and on return / assets and return / equity and inverse with the rest of the relationships described in the model. The results of the joint integration boundary test showed the existence of a long-term relationship between financial liberalization indicators and some banking performance indicators. The results also indicated that the relationship between the variables is a real relationship.