The possibility of using swap contracts in the Iraqi banking environment - a prospective study

Abstract

Derivatives are one of the most important innovations in financial engineering. They were called derivatives because their value is derived from the value of the underlying assets. Swaps contracts are one of the most important derivative tools and are of great importance and widely used in many international banks due to the role these contracts play in enhancing investment opportunities for those banks and achieving the highest level. Possible revenues and profits and hedging the risks to which these banks are exposed, such as price fluctuation risks, interest rate risks, and foreign exchange risks, as well as their role in reducing traditional transaction costs.
Therefore, this research discusses the possibility of using these contracts for Iraqi banks in order to seek to benefit from the advantages of these contracts for the benefit of Iraqi banks. The main goal of the research was to clarify the mechanisms and operation of swap contracts, especially with regard to interest instrument swaps and currency swaps, and to explain their basic role in speculation and achieving profits by achieving them and saving costs. To achieve the goal of the research, the research adopted the hypothesis that the use of swap contracts for Iraqi banks will help them. To reduce financial risks and achieve profits through interest rate swaps and currency swaps.
This research concluded with a set of conclusions and recommendations that can contribute to improving the level and performance of Iraqi banks and help them achieve their goals in the required and correct manner.