The Impact of financial inclusion on banking liquidity and profitability: an analytical study of a sample of Iraqi commercial banks for the period 2011-2019

submitted by
mohammed abduleameer alnasrawi
To the Council of the College of Administration and Economics, University of Karbala, which is part of the requirements for obtaining a Master’s degree in Economic Sciences
Supervising
Asst. Prof sarmed abdulagabar

Abstract
The research aims to identify the impact of financial inclusion on the liquidity and banking profitability of a sample of Iraqi commercial banks, and to know the type of relationship between the study variables whether it is an inverse relationship or a direct relationship, and accordingly, the liquidity and profitability indicators of the sample banks were analyzed and their levels during the period (2011-2019) were analyzed. , And then access to the aggregate index of financial inclusion through the sub-indicators, analyze it and know its reality in Iraq for the period (2011-2019), and for this purpose its impact on the liquidity and banking profitability of a sample of Iraqi commercial banks during the period (2011-2019) was measured and analyzed using a model Self-regression for distributed slowdown periods (ARDL), and the researcher came to the conclusion that there is an effect of financial inclusion on bank liquidity through its indicators, as it was found that there is a relatively weak inverse relationship between it and the index of circulation ratios, as well as a positive and relatively strong relationship between it and the liquidity index. Cash, while the research found an inverse relationship between it and two indicators of banking profitability, which are the rate of return on assets index and the rate of return on deposits index. And n in the short term between all variables of the study in addition to the lack of relationships in the long term.

The research reached a set of conclusions, the most prominent of which is the low levels of financial inclusion in Iraq and the weakness of the banking system represented by the lack of infrastructure, the poverty of the Iraqi banking system for financial inclusion data, as well as the low financial awareness of individuals and their lack of confidence in the banking system, the weakness of the supervisory apparatus of the Central Bank on Iraqi banks, as well as low banking profitability, high risks, and the absence of long-term relationships between the study variables.

Based on the above, the researcher suggested a set of recommendations, including activating the supervisory role of the Central Bank of Iraq in order to oblige banks to maintain acceptable levels of liquidity, and work to enhance digital culture and build capabilities aimed at supporting financial inclusion and benefiting from the rapid technological developments in the global economy, As well as exerting more efforts by the Central Bank to raise the levels of inclusion in the country, which would raise the status of the Iraqi banking system, because of its impact on many social and economic aspects, which in turn is reflected in the reality of growth and development.