Achieving Growth in Contexts of Great Challenge: The Iraqi Private Banking Sector

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A functioning formal private sector is critical for the reconstruction and renewal of post-conflict states.  A formal banking sector is critical to a formal private sector and for achieving economic diversification. Banks are at the forefront of reconstruction initiatives in post-conflict Iraq—lending billions of dollars, making mortgages more accessible, and providing commercial credit. However, many challenges remain.

Iraqi private banks are a case study in sustaining economic growth in a post-conflict context—one that can offer insights and lessons. Bank deposits and available capital from private banks in Iraq have more than doubled in the last five years. Even in a post-conflict environment, Iraqi banks must respond to “Basel III,” a set of global financial regulations that make lending more difficult. The banking system is also responding to global changes in technology and the management and utilization of new forms of data. Official donors such as the United States, as well as multilateral donors such as the World Bank, support the formal private banking sector in post-conflict settings.