Ways to Reform and Develop The Banking Sector in Iraq

Abstract

Reforming Iraq's banking sector is a major challenge for the fiscal policy as a result of its backwardness, not only in Iraq but also in the Middle East and North Africa. According to a 2013 IMF survey, more than 80% of the world's population does not have a bank account. Also the government banks dominates the banking system, representing 75% of the financial system in terms of assets and 77% of GDP, As well as the lack of auditing standards and the ineffectiveness of banking supervision and the lack of insurance companies on deposits and lack of policies of financial inclusion through which it can provide a comprehensive range of financial services including bank accounts, savings and short-term loans and leasing finance and mortgages and retirement plans as well as consumer protection and promotion financial capacity all this led to a lack of confidence in the banking system, Therefore, comprehensive economic reform of Iraqi banks is the only solution to restore confidence in the Iraqi banking system through the restructuring of the banks in terms of human resources and the framework of auditing and accounting, infrastructure, information technology, risk management and banking supervision, as well as opening markets to banks to achieve competitive advantage, so the importance of this research comes from trying to carry out these reforms in order to focus on the events of major changes in the nature of the banking industry for the purpose of mobilizing domestic savings and reduce the phenomenon of capital flight abroad, As well as the possibility of attracting a portion of foreign investment inflows. In order for the reforms of the banking system to be effective there is the financial liberalization of this sector should be achieved through the creation of an appropriate legislative environment for the purpose of increasing competition among banks and the use of advanced technological means of communication and information, as well as the implementation of Basel Committee decisions with a view to working within the international standards of banks, thereby enhancing their international competitiveness.