The impact of US sanctions on Iraqi banks on trading by non-Iraqis in the Iraqi Stock Exchange
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Abstract
On July 19, 2023, the United States of America imposed sanctions on 14 Iraqi banks, including 13 banks listed on the Iraq Stock Exchange, to prevent them from trading the US dollar. These 13 sanctioned banks constitute (29.5%) of the total Iraqi banks listed on the stock market, which number 44 banks, and constitute (48.3%) of the total Islamic banks, which number 29 banks. In addition, they constitute (19%) ) out of the total number of private banks in Iraq, which number 74. The study aims, through economic and econometric analysis, to demonstrate the impact of US sanctions on the thirteen Iraqi banks listed on the Iraqi Stock Exchange on trading for non-Iraqis on the Iraqi Stock Exchange. To achieve this goal, the researchers used weekly data for a period of 55 weeks, i.e. from November 20, 2022 until February 1, 2024, including 30 weeks before the date of imposition of sanctions and 25 weeks after the imposition of sanctions. The study was based on researching the impact of the US sanctions on Iraqi banks through the use of the structural breakdown model (breaking test Chow), as the impact of the sanctions must be reflected in the breakage of the general trend equation. The study concluded that the US sanctions on Iraqi banks have led to a decrease in the weekly average to Number of shares traded and their value for non-Iraqis – purchase. The researchers recommend studying taking some measures by the Central Bank against banks operating in Iraq and their compliance with international laws and standards in order to protect the banks from the risks of US sanctions.
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References
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