The impact of banks’ performance on economic growth: A dynamic generalized method of moments approach

Download This Article

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

The research examines banking sector performance effects on economic expansion across long periods in emerging markets through an analysis of Iraq as a case study. The research uses the dynamic generalized method of moments (GMM) to analyze 18 Iraqi private commercial banks across 2010–2023. The research examines how return on equity (ROE) and return on assets (ROA), and net interest margin (NIM) influence gross domestic product (GDP) expansion. The research shows that economic expansion depends directly on banking performance through ROA and NIM metrics. The research shows that economic development has a weak relationship with investment activities and lending capacity which demands policy changes. The research shows that economic performance depends on outside factors which include technological advancements and political stability. The research establishes new knowledge about banking sector contributions to Iraqi economic development through its integration of bank-specific performance indicators. The research shows that financial institutions need targeted policy interventions while researchers must study all environmental factors for achieving sustainable development. The research results offer operational guidance which assists policymakers and researchers who focus on developing nations.

Keywords: Bank Performance, Dynamic GMM, Economic Growth, Iraq

Authors’ individual contribution: Conceptualization — H.M.J. and N.H.M.A.-H.; Methodology — H.M.J. and N.H.M.A.-H.; Software — N.H.M.A.-H. and H.K.A.; Validation — H.M.J., N.H.M.A.-H., and H.K.A.; Formal Analysis — H.M.J. and N.H.M.A.-H.; Investigation — H.M.J.; Data Curation — H.M.J. and N.H.M.A.-H.; Writing — Original Draft — H.M.J. and N.H.M.A.-H.; Writing — Review & Editing — N.H.M.A.-H. and H.K.A.; Supervision — H.M.J.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: C23, G21, O16, O47

Received: 10.08.2025
Revised: 15.10.2025; 10.11.2025
Accepted: 02.12.2025
Published online: 05.12.2025

How to cite this paper: Jadah, H. M., Al-Husainy, N. H. M., & Ashour, H. K. (2025). The impact of banks’ performance on economic growth: A dynamic generalized method of moments approach. Business Performance Review, 3(2), 134–143. https://doi.org/10.22495/bprv3i2p11