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Journal of Economics and Administrative Sciences

Abstract

This research analyzes the impact of financial depth and financial inclusion on economic growth in Iraq, while also examining their combined effect through an interaction term that captures the complementary dimension of the financial sector. The study adopts an econometric approach using the Autoregressive Distributed Lag (ARDL) model, based on monthly time-series data covering the period (2022–2025), to estimate both short-run and long-run relationships. The results reveal the existence of a long-run equilibrium relationship among the study variables, as confirmed by the Bounds Test and the error correction term. Furthermore, financial depth, represented by broad money (M2/GDP) and credit to the private sector (CR/GDP), shows a positive and statistically significant effect on economic growth, reflecting the importance of financial intermediation efficiency in supporting economic activity. In contrast, financial inclusion, represented by electronic payments (EPAY), exhibits a positive but statistically insignificant effect, indicating its limited current role due to low usage, the dominance of cash transactions, and underdeveloped financial infrastructure. Additionally, inflation (INF) has a negative and statistically significant impact on economic growth, highlighting the importance of macroeconomic stability in enhancing the effectiveness of the financial sector. The study concludes that deepening the financial sector is a key driver of economic growth in Iraq. In contrast, financial inclusion still requires further development to support the economy more effectively.

DOI

10.33095/2227-703X.4364

Article Type

Research Article

Subject Area

Economics

First Page

87

Last Page

99

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

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