The Impact of Monetary Policy on Credit Reporting in The Iraqi Banking System

Abstract

Monetary policy plays an important and influential role in bank lending and in guiding banks to improve economic performance and provide funds for productive activities. The aim of the study is to analyze the relationship between monetary policy represented by broad money supply and some of its indirect instruments and bank credit provided by commercial banks. The study started with the assumption that the relationship between broad money supply and specific monetary and credit policy instruments is weak, given the rent-seeking tendencies of the local economy. The problem of the study is that the Iraqi economy lacks any form of investment due to weak financial activities. Therefore, commercial banks have some responsibility for stimulating domestic investment activities and supporting GDP. Since the economy is profitable, there are other trends in the economy that have a greater impact on banks. Credit is considered as one of the monetary policy tools due to the distorted production relations, foreign exchange transactions and foreign trade, which exacerbate the economic recession.