Measuring and Analyzing the Impact of Selected Digital Transformation Indicators on Inflation Rates in Iraq (2010–2023(

Abstract

This study aims to measure and analyze the impact of selected digital transformation indicators in the financial sector—represented by the number of automated teller machines (ATMs) and points of sale (POS)—on inflation rates in the Iraqi economy over the period 2010–2023. The study relies on annual time-series data and employs the Autoregressive Distributed Lag (ARDL) approach to examine both the long-run and short-run relationships between the variables. The empirical results reveal the existence of a long-run equilibrium relationship between digital transformation indicators and inflation rates, with a statistically significant error correction term, indicating the Iraqi economy’s ability to absorb inflationary shocks through digital channels. The study concludes that digital transformation contributes to enhancing the efficiency of monetary policy transmission and reducing transaction costs, thereby positively supporting price stability. Accordingly, a set of policy-oriented recommendations is proposed to strengthen financial digital transformation in Iraq.