Banking system and monetary transmission in Morocco: Evaluation of the bank credit channel on microeconomic data

Abstract

Monetary policy has always been considered one of the main instruments of economic policy. the efficiency and compatibility of the transmission channels with the specificities of the appropriate financial systems of the countries constitute one of the key factors of the success of the monetary transmission by making it possible to direct the economy in the desired direction. In the study we propose, we focus on the bank credit channel. Although the latter operates through the banking system, understanding how monetary policy affects the reaction of bank credit to monetary shocks allows the central bank to properly implement its policy. Remember that this channel has often been examined on aggregate data by testing the impact of monetary policy on inflation or growth. This paper empirically evaluates the hypothesis of an asymmetric influence of the credit supply of the main Moroccan banks on disaggregated data, in particular according to their level of capitalization, their size and their level of liquidity. To this end, we examine the effect of monetary shocks using panel data that we have constituted around the main Moroccan banks for the period 1999-2019. Our results validate the existence of the bank credit channel in Morocco according to the variables of the size and the liquidity of the banks. As for bank capitalization, it does not seem to have an influence on the supply of credit in Morocco.

Keywords: Monetary policy; Bank lending ; bank liquidity; Bank assets; bank capitalization

JEL Classification : E51, E52, G21, C23.

Paper type: Empirical research.