The impact of monetary policy on banking stability in Iraq

this study examines the impact of monetary policy on the stability of the Iraqi banking system in the post-reform era, focusing on central bank tools: interest rates, money supply regulation, inflation management, and exchange rate adjustments. The banking sector, which consists mostly of state-owned banks with significant non-performing loans, struggles to deliver monetary impulses because of its heavy reliance on oil and structural problems. Using a descriptive quantitative approach with trend analysis based on secondary data from the Central Bank of Iraq, the International Monetary Fund (IMF), the World Bank, and the Iraqi Stock Exchange, the study shows that inflation has been successfully reduced. However, it also demonstrates that poor risk management, excessive reserves in the growing money supply, and an underdeveloped stock market all pose threats to long-term stability. It proposes changes to the risk management structure and capital market development to make policies more consistent with financial stability. This is beneficial for post-conflict oil-dependent economies.

monetary policy, banking stability, Iraq, interest rates, inflation, money supply, Central Bank of Iraq, financial stability, capital markets