The College of Administration and Economics at the University of Baghdad discussed, a PhD dissertation in field of Economic by the student (Yasser Ghanem Yahya ) and tagged with (Measuring and analyzing the impact of financial development on aggregate investment in Iraq) , Under supervision of (Prof. Dr. Mohammed Saleh Salman )
Financial development lead to developing the size, efficiency, and stability of financial institutions (banks) and financial markets, in addition to increasing access to those institutions and markets, which can have multiple advantages for investment and economic growth.
Therefore, this study examines The impact of financial development based on banks and the financial market on aggregate investment in iraq during the quarterly period (2010-2021( in order to identify the breadth and depth of the financial sector in the study country, the study uses financial development indicators based on banks and the marke, in order to expand the scope of aggregate investment, the study included both local (real) and financial investment.
The empirical results of this study show that financial development based on the market and banks positively and negatively affect local investment in the long term, whereas increasing the financial market depth index lead to an increase in local investment, and thus there is a positive impact of financial development through the financial market index on local investment in the long term,while increasing the banking sector depth index will lead to a decrease in domestic investment in the long term due to the increase in the volume of non-performing loans, therefore, there is a negative impact of financial development through the financial institutions index on domestic investment in the long term. while the causality test (yamamoto, toda) showed the existence of a unidirectional causal relationship extending from the domestic investment index to the financial development index.
Moreover, the results of the ardl model showed that financial development positively affect in the financial investment (investment in the iraqi stock market). in other words, financial development of the financial market through the financial efficiency and financial depth index positively affect on the financial market investment, while a causality test (yamamoto toda,) showed that there is a bidirectional causal relationship between the financial efficiency index and financial investment.
Finally, the study recommends that financial development reforms in iraq should revolve around a well-functioning and appropriately organized financial system with strong local foundations, and this will maximize the net benefits of financial development for local and foreign investors alike.
