Cover
Volume 7, Issue 3 (2026)

Published: September 25, 2026

Pages: 132-151

Research Article

The effect of electronic payments on deposit volumes in the Iraqi Banking Sector: An econometric analytical study

Sebyan T. S. Al-aaraji 1
1Department of economics, college of administration and economics, University of Anbar, Ramadi, Iraq
History
  • Received: November 20, 2025
  • Revised: January 12, 2025
  • Accepted: April 12, 2025
  • Available Online: September 25, 2026
DOI

https://doi.org/10.56967/ejfb2026757

Abstract

The aim of this research is to assess the impact of electronic payments on increasing the volume of deposits in the Iraqi banking sector for the time period (January 2018 – September 2025), using an econometric analytical method that includes descriptive time-series analysis, and estimation of an Autoregressive Distributed Lag (ARDL) model. The study uses the indicators of mobile electronic payments and financial transactions processed via the retail payment system (IRPSI) as the independent variables, and the total deposits and current deposits as dependent variables, with the control variables being the money supply, inflation, and oil prices. The results show the gradual growth of the use of electronic payment instruments, especially in terms of the retail payment system, while mobile payments have a limited impact; current deposits are the most significant factor in total deposits. The estimates derived in ARDL show that there is no significant relationship between mobile payments and deposits in the short and long run, while retail payment system transactions have a significant and negative relationship due to its strong relationship with cash withdrawals, particularly cash withdrawals by government salary. The results shown in the control variables indicate that money supply and oil price are important factors in increasing deposits while inflation decreases current deposits because of the loss of purchasing power. Overall, the results indicate that while the electronic payment system is still evolving in Iraq, the use of cash remains at a high level, which necessitates further efforts to boost and reinforce the non-cash payment policy, increase financial and digital awareness, and strengthen the technical systems to promote the efficiency of electronic payment systems and their ability to contribute effectively to the mobilization of deposits within the banking sector.

Keywords

References

  1. Agarwal, S., Ghosh, P., Li, J., & Ruan, T. (2024). Digital Payments and Consumption: Evidence from the 2016 Demonetization in India. Review of Financial Studies, 37(8), 2550–2585. https://doi.org/10.1093/rfs/hhae005
  2. Aguilar, A., Frost, J. Guerra, R., Kamin, S., and Tombini, A. (2024). Digital payments, informality and economic growth. Bank for International Settlements, BIS Working Papers 1196, 1-28.
  3. Ali, S. H. and Ali, M. A. (2024). Economic Analysis of The Electronic Payment System in Iraq: Study of Trends, Impacts and Opportunities for The Period (2018-2023) for Selected Companies (Asia hawala & Zain cash & Nass pay). Tikrit Journal of Administrative and Economic Sciences, 20(67, part 2), 109–134. https://doi.org/10.25130/tjaes.20.67.2.7
  4. Alsharaby, M. (2024). The impact of electronic payment methods on the efficiency of banking performance: An applied study in the Iraqi banking sector for the period from 2018-2022. Entrepreneurship Journal for Finance and Business, 5(2), 143–152. https://doi.org/10.56967/ejfb2024413
  5. Alzoubi, H. M., Alshurideh, M. T., Kurdi, B. A., Alhyasat, K. M. K., & Ghazal, T. M. (2022). The effect of e-payment and online shopping on sales growth: Evidence from banking industry. International Journal of Data and Network Science, 6(4), 1369–1380. https://doi.org/10.5267/j.ijdns.2022.5.014
  6. Calderon, A. A. (2024). Digital Payments and their Role in Enhancing Financial Transactions Efficiency. International Journal of Economics and Financial Issues, 15(1), 182–189. https://doi.org/10.32479/ijefi.17555
  7. Central Bank of Iraq. (2018). Annual Statistical Bulletin. Department of Statistics and Research.
  8. Central Bank of Iraq. (2019). Annual Statistical Bulletin. Department of Statistics and Research.
  9. Central Bank of Iraq. (2020). Annual Statistical Bulletin. Department of Statistics and Research.
  10. Central Bank of Iraq. (2021). Annual Statistical Bulletin. Department of Statistics and Research.
  11. Central Bank of Iraq. (2022). Annual Statistical Bulletin. Department of Statistics and Research.
  12. Central Bank of Iraq. (2023). Annual Statistical Bulletin. Department of Statistics and Research.
  13. Central Bank of Iraq. (2024). Annual Statistical Bulletin. Department of Statistics and Research.
  14. Demirgüç-Kunt, A., L. Klapper, D. Singer, S. Ansar, and J. Hess. 2018. The Global Findex Database 2017: Measuring Financial Inclusion around the World. Technical Report, World Bank Group.
  15. Duong, K.D., Phan, P.T.T, Le, A.N.N., & Tung, H.T. (2023). The Nonlinearity Between Innovations and Deposits Growth: Evidence from a Transition Economy. Montenegrin Journal of Economics, 19(3), 77-88. https://doi.org/10.14254/1800-5845/2023.19-3.6
  16. Ezie, O., Musa, I. C., & Joshua, J. D. (2023). Impact of Electronic Banking on Deposit Money Banks Performance in Nigeria: Evidence from Dynamic Ordinary Least Squares Technique. Journal of Economics, Management and Trade, 29(10), 12–26. https://doi.org/10.9734/jemt/2023/v29i101137
  17. Fadli F., Devia V. (2023). Can an Electronic Money Transaction Raise the Inflation Rate? (Indonesian Pre-Pandemic). Finance: Theory and Practice, 27(5), 205-218. https://doi.org/10.26794/2587-5671-2023-27-5-205-218
  18. García-Merino, J.D., San-Jose, L. & San-Martin, N. (2025) Determinants in adopting cashless payments in Europe: a multilevel analysis. Financial Innovation, 11 (76), 1-20. https://doi.org/10.1186/s40854-024-00750-z
  19. Ha, V. D., & Nguyen, T. T. (2025). The Impact of Adopting E-Commerce Payments on E-Commerce Performance. Journal of Posthumanism, 5(3), 1318–1343. https://doi.org/10.63332/joph.v5i3.912
  20. Hashim, A. A. and Hassan, H. A. (2025). Adopting electronic payment tools to enhance capacity Banks attract public savings (Applied research on a sample of Iraqi banks). Journal of Accounting and Financial Studies, 20(70), 321-335.
  21. Ikoh, I. M., Ocheni, G. A., Tamuno-Inam N. W. (2024). The Effect of E-Payments System on the Efficiency of Banks in Nigeria. International Journal of Research and Innovation in Social Science (IJRISS), 8(08), 810-830. https://doi.org/10.47772/ijriss.2024.808063
  22. Josephine, C. O. (2021). The effects of e-payment system on the efficiency of banks in Nigeria. International Research Journal of Management, IT and Social Sciences, 8(6), 548–558. https://doi.org/10.21744/irjmis.v8n6.1941
  23. Karghali, A. and Belounas, A. A. (2021). Electronic Payment as a Solution to Reduce the Cash Liquidity Crisis in Algeria During the Coronavirus Pandemic. Economic Studies, 21(2), 110-132. https://asjp.cerist.dz/en/article/174658
  24. Lu, M. P., Ooi, C.-A., Lee, K. T., & Kossim, Z. (2022). Does Electronic Payment Services Create Value to Bank Performance? Evidence from Southeast Asia. Asian Academy of Management Journal of Accounting and Finance, 18(2), 139–167. https://doi.org/10.21315/aamjaf2022.18.2.7
  25. Luo, S., Zhou, G., & Zhou, J. (2021). The Impact of Electronic Money on Monetary Policy: Based on DSGE Model Simulations. Mathematics, 9(20), 1-26. https://doi.org/10.3390/math9202614
  26. M. O., DR. O., & A. C., O. (2023). Electronic Payment Systems and Money Deposit Banks’ Deposits Mobilisations in Nigeria. Journal Of Economics, Finance and Management Studies, 06(12), 6029-6040. https://doi.org/10.47191/jefms/v6-i12-31
  27. Mahdi, H. R. (2024). The Development of Electronic Payment in Iraq. Central Bank of Iraq – Banking Supervision Department, 1-9.
  28. Mushkudiani, N. (2018). Development of Electronic Payments in Georgia. Economics and Culture, 15(2), 64–74. https://doi.org/10.2478/jec-2018-0021
  29. Nizam, A. M. (2022). Impact of e-money on money supply: Estimation and policy implication for Bangladesh. PLoS ONE, 17(4), 1-18. https://doi.org/10.1371/journal.pone.0267595
  30. Nugroho, R. H., Ihsan, F., Shafrullah, F., Indrawati, L., Ismail, S., Hadibrata, D. (2023). The Impact of Electronic Money, Inflation, Interest Rates, Foreign Exchange Reserves, and the Amount of Money Supplied in Foreign Currencies in Indonesia, Migration Letters. London, UK, 21(1), 195–203.
  31. Oke, M. O. and Olaiya, A. C. (2023). Electronic Payment Systems and Money Deposit Banks’ Deposits Mobilisations in Nigeria. Journal Of Economics, Finance and Management Studies, 06(12), 6029-6040. https://doi.org/10.47191/jefms/v6-i12-31
  32. Oney, E., Guven, G. O., & Rizvi, W. H. (2017). The Determinants of Electronic Payment Systems Usage from Consumers’ Perspective. Economic Research-Ekonomska Istrazivanja, 30(1), 394–415. https://doi.org/10.1080/1331677X.2017.1305791
  33. Onwuchekwa, j. C., fawe, e. B., and benwari, b. V. (2023). Effect of E-Payment on Financial Performance of Deposit Money Banks in Nigeria. Fuo journal of management sciences, 7(2), 108-117. https://journals.fuotuoke.edu.ng/index.php/fuojms/article/view/100
  34. Osakwe Charity, I., & Ezeaku Chisom, N. (2022). The Effect of Electronic Banking on the Operations of Deposit Money Banks in Nigeria (2006-2020). Journal of Finance and Economic Research, 1(3), 90–111.
  35. Qi, M. (2023). The Impact of E-money on China’s Money Supply. SHS Web of Conferences, 170, 01003.
  36. Quartey, N. K. P. (2018). The Impact of Electronic Banking on the Profitability of Banks: A Case Study of Banks in Ghana. Texila International Journal of Management, 4(2), 119–124. https://doi.org/10.21522/tijmg.2015.04.02.art011
  37. Rakipi, A., Shurdi, O., & Imami, J. (2023). Utilization Of Data Mining and Machine Learning in Digital and Electronic Payments in Banks. Corporate and Business Strategy Review, 4(4 Special Issue), 243–251. https://doi.org/10.22495/cbsrv4i4siart5
  38. Rojek, K. & Stoika, V. (2025). The Impact of Electronic Banking on Banking Deposits: The Case of Poland. Management, (1), 719–744. https://doi.org/10.58691/man/205910
  39. Şahin, H., & Koç, Ü. (2021). The Role of Electronic Payments in Inflation Dynamics. International Journal of Economic and Administrative Studies, (32), 1–16. https://doi.org/10.18092/ulikidince.866774
  40. Sarkar, R. Das, S. (2018). Digitalization and its impact on financial transactions in India. Frontiers of Digital Finance. pp. 1-12.
  41. Tee, HH., Ong, HB. (2016). Cashless payment and economic growth. Financial Innovation, 2 (4), 1-9. https://doi.org/10.1186/s40854-016-0023-z
  42. Torki, L., Rezaei, A., & Razmi, S. F. (2020). The Effects of Electronic Payment Systems on the Performance of the Financial Sector in Selected Islamic Countries. International Journal of Economics and Politics, 1(1), 117–125. https://doi.org/10.29252/jep.1.1.113
  43. Twaliwi, C., Adonye, U., & Peter Damian Ezechi, C. (2023). Impact of Electronic Payment Systems on Economic Growth of Nigeria. Asian Journal of Economics and Business, 4(1), 71–88.
  44. Wu, Y., Zhao, C., & Guo, J. (2023). Mobile payment and subjective well-being in rural China. Economic Research-Ekonomska Istrazivanja, 36(1), 2215–2232. https://doi.org/10.1080/1331677X.2022.2097103
  45. Zandi, M., Koropeckyj, S., Singh, V., & Matsiras, P. (2016). The Impact of Electronic Payments on Economic Growth. Moody`s Analytics, 6(12), 1-31.
  46. Crude Oil Prices. (2025). https://fred.stlouisfed.org/series/DCOILBRENTEU
  47. Central Bank of Iraq. (2025). Statistics and Reports. Monthly Statistical Bulletin. https://cbi.iq/page/122
  48. Gujarati, D. N., & Porter, D. C. (2009). Basic Econometrics. 5th Edition, McGraw- Hill/Irwin.
  49. Bhatta, S. R., Adhikari, P., & Byanjankar, R. (2020). Choice of Regression Models in Time Series Data. Economic Journal of Development Issues, 30(1-2), 101–129. https://doi.org/10.3126/ejdi.v30i1-2.46058
  50. Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616
  51. Pesaran, M.H. (2015). Time Series and Panel Data Econometrics. Oxford University Press, United Kingdom.