Comparison between internal and electronic clearing systems for checks : a case study pertaining to the Iraqi banking industry

Payment clearing is important to ensure that the payment is transferred or the cash from one bank account moves to the other bank. The banking system in Iraq follows two sorts of clearance systems which are the IBCS (Inter Bank Clearing System) and C-ACH (Check Automated Clearing House System). Though the Central Bank of Iraq (CBI) has already modernized the payment clearing systems, the country\'s banks still use the interbank clearing systems. In this background, the current study is a first-of-its-kind attempt to compare and contrast the IBCS and C-ACH systems so as to understand the benefits and disadvantages associated with these two clearance systems and identify the optimal one. For this study, the researcher used secondary data available from the CBI for the study period between 2018 and 2022. The collected data was analyzed for descriptive statistics and correlation to validate the hypotheses. The Mann Whitney U test and independent sample T-test were conducted in the study. Between the systems (IBCS and C-ACH) under study, the C-ACH system gained prominence with the highest number of transfers and the distribution of bank transfers through checks.