Abstract:

This study delves into a significant theme that has undergone extensive theoretical and empirical scrutiny over the years. However, despite numerous investigations, a definitive consensus remains elusive, particularly in the context of low- and middle-income economies. This persistent divergence of opinion among researchers forms the crux of numerous academic and policy debates. To address this, the present work concentrates specifically on the case of Morocco, utilizing an error correction model—a potent analytical tool for probing both short-term and long term relationships between economic variables. Financial development is assessed through three pivotal variables: loans granted to the private sector, stock market capitalization, and liquidity rates. The findings of this analysis provide intriguing nuances to our objectives. In the long term, only the liquidity rate appears to exert a positive influence on economic growth. Conversely, in the short term, loans granted to the private sector seem to play a more significant role in fostering economic growth. However, it is imperative to acknowledge that these findings are not without controversy, as the results also indicate that the Granger causality test fails to confirm a causal link between these variables and economic growth. In summary, this study sheds light on the intricacies of the relationship between financial development and economic growth, within the unique context of Morocco. It underscores the importance of considering both short and long-term timeframes, as well as the intricate interplay between various financial variables, to gain a deeper comprehension of the mechanisms governing this relationship. These results underscore the need for ongoing research and profound contemplation regarding the economic policies required to promote sustainable and balanced growth in the country.

Keywords:

Morocco Economic Growth, Financial Development Variables, Error Correction Model Analysis, Short-term vs. Long-term Dynamics, Economic Policy Implications.

How to Cite:

Massiki Ayoub, Kharbouch Omar, Dahhou Nabil, Sara El Aoufi and Olaya Metwalli. Morocco's Economic Growth Puzzle: The Role of Financial Development. [ref]: vol.22.2024. available at: https://refpress.org/ref-vol22-a17/