This study examines the impact of major financial and economic crises (notably the oil price crash of 2014–2015 and the COVID-19 pandemic) on the stability of the Iraqi banking sector during 2005–2022. It focuses on three key banks: Rafidain and Rashid (state-owned) and the Trade Bank of Iraq (TBI). Financial data and stability indicators were analyzed for each bank. The findings indicate that economic downturns linked to oil revenue shocks negatively impacted the state banks’ credit growth, asset quality, and capital adequacy. At the same time, TBI maintained relatively high liquidity and stability due to its role in financing the oil trade. The IMF has noted that the large state banks became “fragile” after years of on-lending to the government, undermining their liquidity and profitability. Nevertheless, the banking sector’s overall stability was supported by government backing and large reserve buffers (e.g. Rafidain reportedly holds over $6.5 billion in reserves. The study recommends accelerating banking reforms: restructuring the major public banks, establishing deposit insurance, and strengthening payment systems to enhance financial stability.

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