The Impact of Diversification Policy on Revenues of Commercial Banks: A Case of Iraqi Commercial Banks

The study aims to highlight the importance of the diversification policy in Arab banks in general, and Iraqi banks in particular, and its role in improving investment returns and achieving profits, in light of providing a measure of protection against crises by reducing the risks that accompany banking work for the period 2010-2020 as one of the most important Serious and objective formulas to bring the banking sector to a level of stability capable of supporting other economic sectors and pushing forward growth rates and economic development. To achieve the foregoing, the study relied on the Balanced Panel Data analysis methods, which include estimating the model according to the aggregate regression methodology (PRM), the fixed effect (FEM), and the random effect (REM). The study reached a set of results, the most important of which are: the diversity of factors affecting the returns and risks of Iraqi commercial banks in terms of including the diversification policy as an independent variable and the controlling variables for the bank (bank size, income diversification, lending ratio, capital adequacy, efficiency of the bank’s activity) and their varying effects According to the indicator adopted to express the bank returns, as well as the insignificance of the diversification variable in the models. Among the most important recommendations of the study: Demanding Iraqi banks to reconsider their diversification policy in light of the harmonization between profitability and safety and in a manner that enhances the benefit of the bank’s diversification advantages, and in a manner that achieves satisfactory returns for them, in light of reaching a reasonable degree of risk, as well as the necessity of Directing Arab banks towards deepening the effective diversification policy and taking advantage of its advantages in raising their returns and reducing their risks.