High interest rates attract investment limit

12/10/2013 0:00

BAGHDAD - Farah pumice
Expert considered that the bank interest rates are high in Iraqi banks limiting attract investments to the country and thus adversely affect the process of economic development .

Banking expert Hassan said a conciliator (morning) : "The revenue comes from banks , exporters commissions charged for services provided by , and the other benefits that result from bank lending ," noting it is the main supplier of these banks, which is the main source of profits .

Deflate

"The commission and interest in Iraqi banks to Ataathrk much , especially as the central bank left the set for the banks , without interfering in the interest rate environment and commissions charged ," explaining that in the years 2005-2006 the ratio was high , considering that the central bank was encouraged banks to deposit the benefits of daily, weekly and monthly , so as to deflate , where he was awarded benefits between 16 and 18 percent , and the so-called night of deposit (Over Night).

The promise of this policy Balancmashih , as it is to withdraw liquidity from circulation which affects the level of inflation is granted high interest to encourage banks not lending and deposit it, but he was able to limit the rate of inflation in 2010 and began reducing benefits gradually , noting that it will charge for the time being between 12-15 percent, which is also considered high compared to other countries , in return for interest paid for deposits between 4-6 percent , which indicate an increase in the financial market .

Interest rate

And the good that when the comparison between the interest rate paid by certain bank deposits and the interest rate charged for lending find there is a big difference , stressing the need to take into account the cost of borrowing (Cost of Funding), as it is more than current deposits at the expense of farewell fixed and savings the lower the cost of borrowing , especially as the average cost differs from one bank to another

He considered that the impact of bad and discouraging investment , as the loans for the purposes of development involved in the construction of factories , roads and agricultural projects are almost too little and figures given by the banks is incorrect according to their standards different , as well as other influences that drive away investment , including the security side , in addition to routine business .

 the central bank had decided to give private banks are free to determine the interest rate on loans granted to citizens , while private banks rely when determining the interest rate on the usefulness of monetary policy signal determined by the central bank based on levels higher than the level of inflation that exists in Iraq .


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