Bank lending policies in Iraq failed

Bank lending policies in Iraq failed

Ihab Ali deputies 252 2017-10-02

Based economic development on several elements of the Chairperson, from which the existence of a sophisticated banking sector is able to recycle the money between displays of money and demanded of savers and investors, as is the banking system funded by the various economic projects in various small, medium and large species, according to the importance of each type.

On the other hand, there is a sober and strong banking sector would maintain the monetary mass and thus through this sector can maintain exchange rates and control inflation in coordination with the Central Bank of the country, and managed many countries do leaps quality enormous due to bank financing for their economic activities and programs, and do many of the internal and external investments that contributed to the development of economic growth and development. But it became the banking sector develop something essential, especially since the current financial capitalism is capitalism stage, which means that the Alncodeh policy of the banking sector is the dominant economic activity.

In a country like Iraq, especially after the transition from a totalitarian regime in the management of State resources and fails to clear the banking system, was the pick that this important sector is particularly important in order to take its real role in building the country's economy right image, as it is the Iraqi banking sector is the most banking system backward and less developed in the Middle East and North Africa. According to statistics, not more than 80% of the population has a bank account (Sansar Capital 2013).

State-owned banks dominate the Iraqi banking system, accounting for 75% of the financial system in terms of assets and 77% of GDP (7) (IMF, 2013). The main issues in this sector, low capitalization value, especially in the case of each of the Rafidain Bank and Rasheed Bank. Reform of the banking sector, which began in 2006, has provided solutions, in terms of new capital, but implementation has been very slow. Private banks (50) and activities of small short-term oriented retail and wholesale. It has been questioned in the level of professionalism in the work of private banks by officials of the Central Bank of Iraq, with respect to their potential and their aspirations in real economic growth.

Regulations relating to capital requirements, which must be met by the private banks are in the public banks to monopolize the banking sector box. The resolution has a role in the protection of private banks, but at the same time will slow down activity. Also, which forced the big banks to offer more loans and small banks were forced to merge with other financial institutions in an attempt to implement central planning, in addition, have been questioning the effectiveness of banking supervision and auditing standards are lax. The motive behind the lack of public confidence in the banking system due to the lack of deposit insurance, and the issue of the bankruptcy of the Bank of Warka and losses recorded by two of the major banks in the banking system. There is a real need for transparency and means of reliable financial media.

And therefore can be summed up other internal issues that the Iraqi banking systems suffer as follows:

• Gaps in data on bank transactions in the northern region collection (Iraqi Kurdistan)

• The role of parties in transactions and procedures - contributing households use bank funds for their own projects

• financial infrastructure is low and associated with a lack of skills and technology (World Bank, 2012).

This general terms or form and mechanism of the banking sector in Iraq, the general framework, and like banking policies that have been adopted in the development of the reality of economic activity in the country, despite the sheer volume of loans granted to the public, but it is acknowledged by the owners of these banks did not achieve their real set her, especially since most of the loans that were granted to the public was focused on the issue of exceeding the housing crisis for citizens. despite the real estate bank loans and advances and other loans 100 loans pay my name, which amounted to 75 million dinars maximum and $ 40 million at a minimum, as well as loans Meis Of other small granted by some private banks, but they all did not reach the level of ambition or originally did not achieve even a simple solution to the housing crisis in Iraq.

The reason for this is due to the housing crisis can not be addressed only through lending policies to citizens, and through the following:

1. The lack of housing complexes or projects or units ready for housing by the public sector or the private sector, making the solution of this problem lies on the shoulders of the citizen himself, and through the purchase of the land and build a mechanism.

2. This led to the discrepancy and the different pieces of land prices considerably from province to province and even vary within the province itself.

3. Because of their own housing crisis with the launch of a campaign of these loans to rise in land prices, which led to get the process of multiple sale and purchase of land speculation because as it is known that the Earth is one of the useless flexibility of resources, as the specific area and can not be increased.

4. Because of the previous problem and because of rising land plots and increased demand for housing prices, pushing the citizens to the fragmentation of agricultural land and converted residential pieces and sell them, and here is another problem emerged which is the impossibility of obtaining loans for building in these lands being agricultural in origin.

5. The continued increase in demand for housing, with the deterioration of global oil prices, the size of government and the ability of private banks to expand lending to citizens, and even stopped many loans by banks because of the scarcity of bank liquidity.

This is part of the other side, even the rest of the other loans for agricultural and industrial such as loans, the corruption was the reason for the failure to achieve its goals, as it did not achieve good results because of the corruption that exists in the banks with regard to the granting of loans to those who deserve it, as well as the beneficiaries of which citizens were not they directed towards productive channels that are supposed to be these loans dedicated to her, but rather the contrary, these loans turned out to satisfy consumer needs and some of the other towards solving the housing problem also, which means the control of the housing crisis on all aspects of life.

In addition, the lack of control and transparency in the follow-up to the disbursement of these loans channels that are supposed to be an end in the form of productive projects of economic benefit to the country, and on the other hand, and even under the limited success of some of the projects resulting from these loans, the government did not take it upon themselves to intensify efforts to market and ensure the success of these projects through the provision of consulting services and expertise necessary for the sustainability of the success of the activity of these projects, which on the successes achieved to ultimately failed because of the moral and material support by the interruption.

Even though lending policies that were later contributed to make matters worse, what is the meaning of the launch of loans for doctors and pharmacists only, or campaign launch loans to buy cars, or loans and advances amounting to 10 million dinars for employees, as are all of these loans are consumer and totally productive loans. Means the final result, the government has failed to find a lending policy of banking successful, take it upon themselves to achieve or build a development base correct economic, which contributed to the loss of development and public finance opportunities, and this is an economic disaster, as these losses can not be compensated again, thus it is necessary to form the management of lending policies in Iraq, take on the management of public loans in the country in order to ensure the achievement of the goals assigned to them properly.