Vol. 9 No. 38 (2026) | articles

The Impact of Monetary Policies on theStability of the Iraqi Banking SectorAn Analytical Econometric Study for the Period(2015–2025)

1 Authors
Authors
Wabla Mahdi Saleh
General Directorate of Education in Anbar, Anbar, Iraq
Wa
Published
2026-08-28
Section
articles
Abstract

This research aims to measure the impact of monetary
policy tools (discount rate, reserve requirement ratio, and
broad money supply growth M2) on the stability of the
Iraqi banking sector during the quarterly period Q1-2015
to Q4-2024 (44 observations), using the ARDL model,
Error Correction Model (ECM), Augmented Dickey-
Fuller (ADF) unit root test, Bounds Testing for
cointegration, and diagnostic tests. The results reveal
statistically significant long-run equilibrium
relationships between monetary policy tools and banking
stability indicators (CAR at 0.742, NPL at -0.228, Z-
score at 0.318). Diagnostic tests (Durbin-Watson, VIF,
Breusch-Pagan, Jarque-Bera) confirm the validity of the
estimated models.

Keywords
Monetary Policy Banking Sector Stability Capital Adequacy Non-Performing Loans Z-score ARDL Model Unit Root Test Cointegration
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