The banking sector often faces many risks that vary in severity from one bank to another. As a result of the intensification of competition in the banking market due to financial globalization and the liberalization of financial services, the risks facing banks have increased, which requires the application of modern tools to manage these risks. Stress tests are one of these tools, as they represent an early warning to achieve banking stability in the face of real sector shocks. The Iraqi economy is highly susceptible to shocks due to its one-sided nature and heavy dependence on oil resources. Accordingly, the objective of the study is to demonstrate how economic variables affect banking stability using stress tests in a variety of scenarios. The banking stress test scenarios showed the strength of the overall indicator in the direction of shocks in the overall variables, indicating the strength of the financial position of the banking system in Iraq in the face of risks that occur within the framework of the macroeconomy. The research suggested Central Bank should provide the necessary funds to handle any emergency in the banking industry, such as increased bad debts, commercial banks must understand the importance of carefully studying the creditworthiness of borrowers before granting them credit and creating a robust plan to collect their overdue debts.