Role of Commercial Banks in Stimulating Investments Amid Exchange Rate Fluctuations in Iraq

Abstract

When it comes to boosting the economy, development, and allocation of financial resources from accessible savings to be employed in all economic sectors (industrial, agricultural, and service), commercial banks in developing and Arab countries are seen as one of the tools. Foreign and domestic investment play critical roles in the economies of both established and developing nations by providing much-needed capital, allowing for the more efficient use of available natural and human resources, and allowing for the more rapid adoption of cutting-edge technologies. Investment success depends on the presence of institutions and capacities of a developed financial and banking type. The significance of this study can be seen in how it examines the reality of commercial banks and their function in promoting and activating domestic and international investment in the context of exchange rate fluctuations, taking into account the financial resources and financial surpluses that commercial banks have available to them to lend money and credit to promote local investment. The banking system, including commercial banks, suffers from challenges since the eighties and nineties of the last century due to wars and the effects of the economic blockade, up to the after 2003 political and security events, in addition to accumulations in banking laws and regulations that did not contribute to the development of the banking sector in Iraq. Also, commercial banks did not contribute effectively to financing investment, and this is evident from the low level of funding for local investments. In addition, the structural imbalances in the Iraqi economy, the deterioration of infrastructure, and the repercussions of Corona led to the reluctance of investors to invest in Iraq. The investment environment available in Iraq is a suitable environment for investment and provides capacity. However, the political and security challenges facing the country and the administrative and financial corruption in most parts of the state have negatively affected the volume of investments in a way that is not commensurate with the volume of available natural and human resources and available investment opportunities. The most important conclusions of this research were as follows