The relationship between the optimal monetary policy variables and the indicators of financial stability in the Iraqi economy for the period 2005-2015

Abstract

The aim of this study is to determine the optimal monetary policy that achieves financial stability in the Iraqi economy based on quarterly data covering the period 2005-2015, using the Autoregressive Distributed Lag (ARDL) model to analyze the effect of optimal monetary policy on financial stability for the period 2005-2015.The results showed a long-term positive response from the optimal money supply variable to the indicators of financial stability (bank liquidity, cash credit, stock market index, foreign reserves). These results confirm the important role of money supply in banking and financial stability.