The impact of banking safety determinants on the composite index of financial stability in Iraq: An analytical study for the period (2015/2024)

Abstract

This study aimed to elucidate the trajectory of the composite Financial Stability Index and analyze its sub-components and weighting matrix. It contributes to a critical analytical reading of this causal relationship, attempting to decouple the microvariables of banks from the overall financial stability score in an environment characterized by rapid digital transformation and increasing regulatory pressures. This provides a scientific perspective on the future of the Iraqi financial system and its resilience to future crises. The study posited a main hypothesis: that banking soundness determinants have a statistically significant impact on raising the value of the composite Financial Stability Index in Iraq. The study concluded that the macroeconomic indicator plays a clear role, as the financial analysis, which relied on a control variable, mitigated the severity of crises and prevented the collapse of financial stability during periods of recession. The study recommended the necessity of continuous coordination between monetary policy (Central Bank) and fiscal policy (Ministry of Finance) to ensure a stable macroeconomic environment that supports banking performance and enhances overall financial stability.