The Research Department of Economics and Management of Tadbir Nikan Business, Marketing, and Finance Open 3092-6238 In Press 2027 07 01 Dynamic Modeling of Financial Health in Emerging Banking Systems: Evidence from Iraqi Banks Using GMM and Panel Data Techniques Dynamic Modeling of Financial Health in Emerging Banking Systems: Evidence from Iraqi Banks Using GMM and Panel Data Techniques 1 16 EN Journal Article 2026 04 06 <p>This study aimed to develop and empirically test a dynamic econometric model for evaluating the financial health of Iraqi banks by integrating bank-specific financial indicators and macroeconomic determinants within a panel data framework. The study employed a quantitative, applied, and longitudinal panel-data design using balanced annual data from Iraqi commercial banks over the period 2010–2024. Financial health was proxied primarily through credit-risk indicators, particularly the non-performing loan ratio. The explanatory variables included bank-level indicators such as capital adequacy, profitability, liquidity, and portfolio concentration, together with macroeconomic variables including inflation, GDP growth, and oil price volatility. To ensure robust estimation, the analysis applied Pooled Ordinary Least Squares, Fixed Effects, Random Effects, and Generalized Method of Moments models. The GMM approach was used to control for dynamic persistence, unobserved heterogeneity, simultaneity, and potential endogeneity in the relationship between banking indicators and financial health. The inferential results indicated that financial health in Iraqi banks is dynamically persistent, as the lagged dependent variable remained statistically significant in the GMM model. Non-performing loans had a significant negative effect on financial stability, confirming the central role of credit risk in weakening banking soundness. Capital adequacy and profitability showed significant positive effects, suggesting that better capitalization and stronger earnings capacity improve bank resilience. Macroeconomic variables, particularly oil price volatility, significantly improved the explanatory power of the model, demonstrating the vulnerability of Iraqi banks to external macroeconomic shocks. Overall, the dynamic GMM model provided stronger inferential performance than static panel models. The findings confirm that financial health in Iraqi banks cannot be adequately assessed through static accounting indicators alone. A dynamic panel-data approach provides a more accurate and forward-looking understanding of banking fragility in oil-dependent emerging economies. The results highlight the need for Iraqi regulators and bank managers to strengthen credit-risk monitoring, enhance capital buffers, improve profitability, and incorporate macroeconomic stress indicators into supervisory frameworks.</p> https://www.bmfopen.com/index.php/bmfopen/article/download/518/365