Analysis of The Impact of Monetary Policy in Bank Credit: An Applied Study On the Iraqi Banking Sector Using The NARDL Model from 2005 To 2021

Abstract

The study aimed to analyze the impact of monetary policy on bank credit in Iraq. We depended on the application of standard methods by applying a Nonlinear Autoregressive Distributed Lag (NARDL), based on monthly data for a time series for the period (2005 - 2021). The results showed a positive, long-term positive shock relationship to the independent variables (money supply, policy interest rate, inflation and bank deposits) on the dependent variable (bank credit), while the results did not show an effect of long-term negative shocks by the independent variables (money supply, price of money, Policy interest, inflation and deposits) on the dependent variable (bank credit) with the exception of the effect of long-term negative shocks by bank deposits on bank credit where it was positive, while a significant long-term inverse relationship was also found for the positive shocks of the independent variables (legal reserve and price exchange) on the dependent variable (bank credit), while the effect of long-term negative shocks generated by the exchange rate on bank credit is direct and moral, while there is no effect of long-term negative shocks generated by the legal reserve in the dependent variable (bank credit). In light of the results of the study, the researcher recommends the need to develop specific administrative and organizational measures to control the variables that govern the management of expansion and contraction in the volume of bank credit granted by banks operating in the Iraqi banking sector in proportion to stimulating economic growth, as well as unifying the efforts of the central bank and commercial banks operating in The Iraqi banking sector to create a suitable climate for bank credit.