Does Country-Level Institutional Quality Influence Financial Development in Iraq?

Does Country-Level Institutional Quality Influence Financial Development in Iraq?

Aziz Mohammed Aziz
Accounting Department

College of Administration & Economic

Al-Muthanna University

aziz@mu.edu.iq

Abstract
In the context of Iraq, this article examines the relationship between the country level institutional quality and financial development. For Iraq, data on institutional quality at the country-level were used to assess the study's assumptions, which ranged from 2004 to 2020 and collected from World Bank, IMF, and Worldwide Governance Indicators databases. For this purpose, ordinary least square regression, quantile regression and stepwise regression were used to examine the elements that impact financial development in this study. According to the findings of this research, voice and accountability, regulator quality and control of corruption are positively related to financial development. In contrast, government effectiveness, political stability and rule of law are negatively significant to explain financial development in Iraq. It is suggested that low country-level institutional quality presents a considerable market risk since it signals the existence of a poor economic environment that restricts financial growth. Improved financial market transparency, in turn, may lead to higher financial growth, according to the findings of this study. On contrary to prior studies, the current study will pave the way for greater public understanding of the influence of country-level institutional quality on Iraq's financial development.

Keywords: country level-institutional quality; financial development; Iraq