Capital Market Indicators as Mediators of Monetary Policy's Impact on Iraq's Financial Stability

Abstract

This study examines capital market indicators trading volume, market value and turnover 6as mediators of monetary policy's impact on Iraq's banking stability, measured by Z-score, using 2005–2023 data and EViews 12 for regression and mediation analysis. Results show partial mediation by trading volume and market value Sobel p < 0.05, with policy rate positively affecting stability, while money supply and inflation negatively influence it. Oil prices enhance market performance p=0.01, inflation impedes it p=0.04. Findings emphasize oil dependency risks and advocate structural reforms, regulatory improvements, and diversification for greater financial resilience.