The role of digital inclusion in promoting bank savings and the stability of the money supply (M2) in the Iraqi economy: An econometric study for the period (2004-2023)

The study examines the effects of financial digitization indicators on domestic liquidity and savings in the Iraqi economy during 2004-2023. Digital inclusion indicators refer to the coverage of financial services, individuals' access to financial services, and the use of digital payment and savings tools. All these have a positive influence on banking operations efficiency and the Iraqi economy. Economic and econometric analysis of the impact assertion was carried out using EViews 12 software. It was observed that digital inclusion and internet usage have a positive relationship with domestic liquidity. However, internet usage and ATM usage did not have a positive relationship with domestic liquidity in Iraq. Similarly, financial digitization had a positive relationship with savings; however, mobile phone usage, internet usage, and ATM usage had a negative relationship with savings. The savings variable had a steady increase during the study period, which indicates that it faces significant challenges in its operation. Thus, it is important to have a policy that ensures financial digitization has a positive influence on domestic liquidity. It should counteract challenges arising from high usage of mobile phones for non-productive activities that reduce financial flow or circulation in the economy. It is important to investigate and find a solution to counter negative influences of mobile phones, internet usage, and ATMs on savings. All these would help increase savings in the economy. It is a core base for productive investment. It also indicates a gap in savings awareness in the Iraqi economy. It is important to create banking literacy for individuals. It should increase confidence levels that would have a positive influence on savings. It would lead to a genuine or productive increase in savings.