The role of bank credit in the components of aggregate demand – Iraq Case Study.
A Thesis Submitted To
The Council of The Faculty of Administration and Economics – University of Karbala
It Is Part of The Requirements for Obtining a Master’s Degree in Economic Sciences
by the student
Hamza Abdul Zahra Hamza Abbas
Supervised By
Prof. Dr. Muhammad Hussien
Bank credit is of great importance due to the large cycle in financing economic activity in a way that serves the interest of the national economy by organizing and developing short, medium and long-term financing mechanisms, and therefore bank credit has an active role in influencing the economic activity of any country by influencing the components of aggregate demand.
As the importance of research is focused on knowing the role of bank credit in the components of aggregate demand (consumption, investment, government spending, exports, imports), and to know the extent to which the components of aggregate demand respond to the effectiveness of bank credit, as the problem lies in the following question (What is the role that bank credit can play in the components of aggregate demand in Iraq?).
The research proceeded from the hypothesis that bank credit carried out by credit policy has an effective impact on the development of aggregate demand through the possibility that the nature of the relationship between bank credit and the components of aggregate demand is positive.
That is, the relationship between bank credit and the components of aggregate demand is a direct relationship, as the increase in granting credit and lending operations by banks to commercial activities and various economic sectors leads to stimulating aggregate demand as a result of the increase in consumer and investment spending, which leads to an increase in national output.
It has been proven to us through research that the increase in bank credit leads to a small increase in investment spending compared to the significant increase in consumer spending and government spending, it is necessary to work seriously to pay greater attention to increasing investment spending and compressing consumer spending through the development of a long-term government program to reduce consumerism and move towards increasing investment spending, which is the main key to development.
