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Impact of Liquidity Level on the Monetary Policy Transmission Effectiveness of the Moroccan Central Bank (Bank Al Maghrib)

Author

Listed:
  • Nicolas Moumni

    (Jules Verne University of Amiens, (UPJV, CRIISEA) France.)

  • Benaissa Nahhal

    (Jules Verne University of Amiens, (UPJV, CRIISEA) France.and Mohamed V University, AGDAL, in Rabat, Morocco.)

Abstract

In the context of international financial crisis, this paper aims to analyze the impact of the liquidity level on the monetary policy transmission effectiveness of the Moroccan Central Bank (Bank Al Maghrib, BAM). After a long period of liquidity excess, the Moroccan banking system through, since 2007, a liquidity shortage that forces BAM to inject a regular and massive quantity of liquidity. Thus, to evaluate the influence of liquidity level on the monetary policy transmission effectiveness of Bank Al Maghrib, we apply a VAR modeling over the period 1998-2012, by distinguishing the period of liquidity excess and liquidity shortage and using two types of liquidity indicators. Our results show that in an excess liquidity period the monetary policy transmission would be less efficient, especially in the longer term. Instead, a liquidity shortage situation makes it more effective.

Suggested Citation

  • Nicolas Moumni & Benaissa Nahhal, 2014. "Impact of Liquidity Level on the Monetary Policy Transmission Effectiveness of the Moroccan Central Bank (Bank Al Maghrib)," International Journal of Economics and Financial Issues, International Journal of Economics and Financial Issues, vol. 4(4), pages 801-818.
    • Handle: RePEc:eco:journ1:2014-04-10
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    References listed on IDEAS

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    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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