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Firm-Level Data and Monetary Policy: The Case of a Middle Income Country

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  • Lahcen Bounader
  • Mohamed Doukali

Abstract

We test the existence of the balance sheet channel of monetary policy in a middle-income country. Firm-level data scarcity and quality, in such a context, make the identification of this channel a steep challenge. To circumvent this challenge, we use panel instrumental variables estimation with measurement error to analyze the financial statements of 58 500 Moroccan firms over the period 2010-2016. Our analysis confirms the existence of this channel. It shows that monetary policy has a significant impact on small and medium enterprises’ access to banks’ financing, and that firm-specific variables are key determinants of firms’ financing decisions.

Suggested Citation

  • Lahcen Bounader & Mohamed Doukali, 2019. "Firm-Level Data and Monetary Policy: The Case of a Middle Income Country," IMF Working Papers 2019/239, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2019/239
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    Keywords

    WP; firm; long-term debt; short-term debt; balance sheet response; reputation build-up; financing decision; debt variable; data scarcity; Financial statements; Loans; Collateral; Trade credits; Estimation techniques; Maghreb; Southern Europe;
    All these keywords.

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