Analyzing and Measuring the Impact of Financial Policy on Bank Credit in Iraq

This study dealt with the basics of government spending, public revenues, and public loans as indicators of financial policy and bank credit, in addition to explaining the relationship between these variables in Iraq for the period (2005-2021), by analyzing the reality of the study variables economically and analogically, the descriptive approach was used in analyzing Data for financial policy indicators and bank credit, where bank credit (BC) was analyzed as a dependent variable, and public spending (GS), public revenues (GR) and public loans (GL) were analyzed as independent variables, and according to the Dickey-Fuller test (ADF), it was found that the degree of integration of the study variables is A mixture of type (0)I and type (1)I, and thus the model was estimated according to the autoregressive distributed lag (ARDL) methodology, thus, the model was estimated according to the autoregressive distributed lag (ARDL) methodology, and according to the bounds test for co-integration, it was revealed that there was a co-integration relationship for the model, and the estimated model was successful in all standard goodness tests (autocorrelation, heterogeneity of variance, normal distribution of residuals), in addition to that it was Stable according to the CUSUM and CUSUM SQ tests. The most important results of the study were that the relationship of both public revenues and public loans in the two terms to bank credit was positive, but the relationship of government spending in the two terms was inverse, and that all of these relationships were significant. The credit provided to the public sector witnessed a continuous increase throughout the study period, while the percentage of credit provided to the government was increasing at the expense of a continuous decrease in the percentage of credit provided to public institutions, the percentage of credit provided to the public sector witnessed a decline compared to the increase in the percentage of credit provided to the public sector out of total credit. Cash, both public revenues and government spending in Iraq were negatively affected by the financial, security and health crises, but bank credit was positively affected by the same crises. The study came out with a set of recommendations, the most important of which was: Iraq should work to diversify its sources of income and reduce its dependence on crude oil and its revenues in forming its public revenues and public spending, which fluctuate with the fluctuation of global oil prices, increasing with its rise and decreasing with its fall, Iraq must work to increase the proportion of investment spending to Total government spending, Iraq must also work to reduce dependence on its oil revenues and work to increase the ratio of non-oil revenues to total public