The Impact of Financial Innovation on the Performance of the Iraqi Banking Sector/Analytical Research

Abstract

The research aimed to demonstrate the extent of the impact of financial innovation on the performance of the Iraqi banking sector, by diagnosing the reality of financial innovation in the Iraqi banking sector and measuring the profitability, efficiency and risk of banks operating in the sector. Financial innovation was measured by using indicators related to electronic payment (bank cards and ATMs), and financial performance was measured in terms of bank profitability (return on equity) and the risk aspect associated with performance (bank solvency ratio) and the efficiency aspect of banks (employment ratio). The research community was embodied in the Iraqi banking sector, for a period of (7) years from 2017 to 2023. To achieve the research objectives, statistical programs (SPSS and Eviews12) were used to conduct data integrity tests and then test the research hypotheses using regression according to the least squares (LS) method. The results showed that financial innovation represented by electronic payment has a significant impact on both bank profitability and solvency, and the existence of that significant impact of financial innovation on the employment ratio was not proven.