The impact of oil price fluctuations on banking profitability An analytical study in a sample of private commercial banks listed in the Iraq Stock Exchange for the period (2005-2020)

Abstract

The purpose of this research is to shed light on the role that oil price fluctuations play in the Iraqi economy, because Iraq’s economy is a rentier economy that depends on oil imports by 95%, and its impact on banking profitability, since the banking sector is the largest player in the Iraqi stock market through two indicators: (the rate of return on equity, and rate of return on assets). Three private commercial banks were selected, (Mosul Bank, United Investment Bank, and Khaleeji Commercial Bank), which have large capital and continue to trade in the financial market. The research problem focused on showing whether fluctuations in oil prices are reflected in the profitability indicators. For the purpose of testing the hypothesis, the coefficient of determination R² and the F-test were used to measure the impact of oil price fluctuations on the approved profitability indicators. The research came to the conclusion that there is a significant effect of oil price fluctuations on profitability indicators for all banks. The null hypothesis was rejected and the alternative hypothesis was accepted. The research also recommended, inter alia, the necessity of banks to include the economic impact of oil prices in their future investment plans.