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Abstract

This research delves into the intricacies of the Iraqi banking sector, focusing on its concentration and competitiveness using the Herfindahl-Hirschmann Index (HHI) as a pivotal tool. In the backdrop of modern financial dynamics and the rapid globalization of banking systems, understanding the concentration and competitiveness of the banking sector becomes paramount, especially for developing nations such as Iraq. Drawing data from government and private banks operating in Iraq from 2005 to 2020, this study provides a comprehensive view of the sector’s evolution over these 15 years. The research reveals significant insights into the relationship between banking concentration, as measured by the HHI, and various facets of competitiveness, including lending rates and the overall health of the financial system. Furthermore, external factors, such as regulatory changes, are explored in shaping the competitive landscape. This study concludes with several key findings, most notably the disparities in concentration between government and private banks and the influence of market concentration on the accessibility of financial services to the general populace. Recommendations are put forth, emphasizing the need for regulatory interventions, fostering innovation, and promoting financial inclusion. This research serves as a valuable resource for policymakers, financial institutions, and researchers keen on understanding the dynamics of the Iraqi banking sector.

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