Impact of monetary and financial policies on the performance of commercial banks in Iraq - BBAC banks and Kurdistan International bank

Langa Esmael  Karem; Hakar Abubakir  Bayz; Mahabad Ghafur  Darwesh; Diary Jalal  Ali

doi:10.25098/6.1.35

Authors

Langa Esmael Karem Technical Accounting Department, Technical College of Administration, Sulaimani Polytechnic University, Sulaimani, Iraq
Hakar Abubakir Bayz Technical Accounting Department, Technical College of Administration, Sulaimani Polytechnic University, Sulaimani, Iraq
Mahabad Ghafur Darwesh Technical Accounting Department, Technical College of Administration, Sulaimani Polytechnic University, Sulaimani, Iraq
Diary Jalal Ali International Trade Department, University of Halabja, Halabja, Iraq

DOI:

https://doi.org/10.25098/6.1.35

Keywords:

Cash and finance, cash and performance, financial and performance, cash and banks

Abstract

The research aims to clarify the impact of both monetary and fiscal policy on the performance indicators of commercial banks. The study uses multi-stage linear regression method for data analysis for a sample of BBAC bank and KIB in Iraq for the period 2006-2019. The results show that the monetary policy indicators of money supply and inflation have had significant impact on the profitability solvency indicators of BBAC bank. The money supply index had an impact on the profitability index of KIB. However, fiscal policy has no impact on the selected banking performance indicators. Furthermore, the results show that the fiscal policy indicators of revenues, expenditures and the general budget had no impact on the performance indicators of the sample banks. Monetary policy indicators of tight money supply, exchange rate and inflation have had mixed impact on the banks performance indicators. The results of the quantitative analysis show that monetary and financial policies do not have a similar impact on the performance of BBAC and KIB for the period 2006-2019. As recommendation, the monetary authority should seek maintain the growth rates of the money supply consistent with economic activity. The monetary authority needs to reduce inflation rates and keep it low as a monetary policy objective in Iraq.

References

Abdullah, H. A., Awrahman, H. G., & Omer, H. A. (2021). Effect of Working Capital Management on The Financial Performance of Banks: An Empirical Analysis for Banks Listed on The Iraq Stock Exchange. QALAAI ZANIST SCIENTIFIC JOURNAL, 6(1), 429-456.

Abdullah, H., & Fatah, N. (2020). The effect of the COVID-19 pandemic on capital stock gains: evidence of large stock exchanges. In Third scientific international conference of Al-Mustansiriyah University, Baghdad.

Abdullah, H., & Tursoy, T. (2021). Capital structure and firm performance: evidence of Germany under IFRS adoption. Review of Managerial Science, 15(2), 379-398.

Ahmed, B. A. (2013). Estimating the influence of monetary and financial policies on the performance of commercial banks using the Stepwise method. Kirkuk: journal of kirkuk University For Administrative and Economic Sciences.

Ali, D. (2018). Impact of Working Capital Management on Banks’ Performance: Evidence from UK. Nicosia: Near East University.

Akalpler, E. & Abdullah, H. (2020). The Impact of IFRS Adoption as Control Variable on the Stock Market-Growth Nexus: Model Countries Germany and Poland. International CEO Communication, Economics, Organization & Social Sciences Congress. Gorazde University in Bosnia and Herzegovina.

Chinedu, U. A. (2021). IMPACT OF MONETARY POLICY ON COMMERCIAL BANKS’ SUPPLY OF AGRICULTURE CREDIT IN NIGERIA. International Journal of Research, 7(21), 6.

Dhungana, B. R. (2014). COMMERCIAL BANKS AND ECONOMIC GROWTH: A CASE OF NEPAL. A Biannual Refereed International Journal of Business and Social Studies, 8(10), 9.

Hamad, A. H. (2021). The role of the cash flow statement to provide accounting information for the financial decision-making process:(Case study International Islamic Bank of Kurdistan. QALAAI ZANIST SCIENTIFIC JOURNAL, 6(2), 12.

Issahaku, H. (2019). FINANCIAL MARKETS AND MONETARY POLICY: A REVIEW OF ISSUES, THEORIES, METHODOLOGY AND THE WAY FORWARD. electronic journal, 9(13), 12.

Kanungo, E. (2020). Impact of Monetary Policy on the Efficiency of Indian Banking Sector. researchgate, 14(9), 8.

KAREM, H. A. (2021). Corporate Governance And Its Effect On Firm Performance In An Emerging Economy. International Journal of Environmental, Sustainability, and Social Science, 281-291.

Kazim, I. A. (2017). the impact of imports on some macro ecnomic variables in Iraq. Babil: magazine of college Administration&Economics for economic &administration & financial studies.

Mahbub, T. (2016). The Performance of Bangladeshi Commercial Banks: The Role of Corporate Governance. researchgate, 10(26), 38.

Mnyampanda, A. M. (2021). Relationship between Asset Quality and Financial Performance of Commercial Banks Before and After Shifting Capital City Located to Dodoma Region, Tanzania. International Journal of Multidisciplinary Research and Explorer, 9(11), 11.

Mohammad, s. a. (2016). The impact of fiscal and monetary policy on economic growth: An applied study on the Egyptian economy. qahira: Arab Democratic Center.

Nkrumah, E. N. (2018). Empirical Assessment on the Impact of Monetary Policies on Performance of Banks Listed on the Ghana Stock Exchange. Journal of Emerging Issues in Economics, Finance and Banking, 2(23), 6-7.

Nyongesa, D. (2014). Effect of Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kisumu, Kenya. Greener Journal of Economics and Accountancy, 10(21), 6.

Rahaman, M. (2015). The Necessity of New Commercial Banks in Bangladesh: An Exploratory Study for Evaluating the. Daffodil International University Journal of Business and Economics, 8(15), 11.

Rasul, R., Isiksal, A., & Abdullah, H. (2022). Dividend policy and firm value: evidence of financial firms from Borsa Istanbul under the IFRS adoption. Spanish Journal of Finance and Accounting.

Shen, C.-H. (2018). Bank Liquidity Risk and Performance. Review of Pacific Basin Financial Markets and Policies, 10(20), 7.