The role of the exchange rate in achieving banking stability
(Iraq case study 2010 – 2019)
A Thesis Submitted to the Board of the College of Management and Economics, which is Part of the Requirements for Obtaining a Master’s Degree in Finance and Banking Sciences

Presented By
Saif. M. Al-asdi
Supervised By
Asst. Prof. Dr. Kamal K. Jawad Al-Shammari

ِAbstract

The exchange rate is one of the means by which the monetary policy objectives of achieving monetary stability in any national economy can be achieved. Through the exchange rate channel, the central bank can maintain the general level of prices and the income level within the economy and thus control the level of exports and imports from During the control of the exchange rate and the amount of currency sold in the auction, the controversial question raised by the research is whether there is a correlation between the indicators of the managed floating exchange rate and the indicators of banking stability, and is there an effect of the exchange rate indicators on all or some indicators of banking stability.
     The researcher was able to measure the impact and correlation relationship between the two variables during the study period (2010-2019) and reached a set of results, the most prominent of which is that there is a positive correlation between the window exchange rate and between some indicators of banking stability (capital adequacy, asset quality, return on property rights and the ratio of Loans and advances to total deposits) while there is no correlation with the rest of the indicators, as for the parallel exchange rate, there is no correlation between it and indicators of banking stability except with the absolute value index, and there is a positive correlation, and the study revealed the existence of a significant correlation relationship between the quantity Window sales and the return on assets index, while there is no correlation with the rest of the indicators, and the research concluded that there is no effect of the window’s exchange rate on banking stability indicators through the parallel market price. The parallel exchange rate, and the reason for the lack of effect is attributed to the fact that the exchange rate and the quantity of sales during the study period were similar to stable ones.
The study recommends the need to study the role of the monetary policy of the Central Bank in Iraq in a way that it can influence the banking sector to increase banking stability and thus increase monetary stability, maintain the official exchange rate (window exchange rate) from the sudden movement to maintain banking stability, as well as the need to monitor Foreign currency itinerary to eliminate money laundering and smuggling mark.