Factors affecting the financial outcomes of Iraqi-listed banks

This paper investigates the factors that influence bank financial outcomes in Iraq through an analysis of important financial, corporate governance, and economic aspects. Data between 2017–2021 from annual reports of 9 Iraqi banks listed on the stock exchange was collected. The study used panel data regression with the Generalized Method of Moments (GMM), particularly by utilizing Two-Stage Least Squares (2SLS) to evaluate how asset efficiency, operational performance, board size, GDP, and interest rate affect bank financial outcomes. The results show that AE affects both performance indicators (ROA and ROE) significantly, claiming that high asses efficiency boosts Iraqi banks' profitability. ROA is adversely affected by OP, suggesting that weak efficiency in operations can result in decreased profitability. BOS, as a proxy of corporate governance, has a positive and significant impact on ROE only, indicating that strategic supervision maximizes returns for shareholders. Moreover, GDP has no influence on ROE, but it has a negative impact on ROA, possibly due to greater lending or competition. The findings also illustrate that higher interest rates diminish bank performance, suggesting that banks' profitability may be constrained by rising interest rates because elevated rates can decrease demand for loans, increase the risk of default, and damage credit in general. For academics, decision-makers, and banking experts, this research provides insightful information about the elements affecting the financial outcomes of Iraqi banks. Nonetheless, the results only apply to banking institutions in Iraq; further study in different regions is required for wider generalizability. Future research could also broaden the conclusions of this study by analyzing the larger sample of Iraqi banks and explaining how political instability or changes in regulations might impact the correlations between economic parameters and bank performance.