WP/09/53

Credit Market in Morocco: A Disequilibrium Approach
Laurence Allain and Nada Oulidi

© 2009 International Monetary Fund

WP/09/53

IMF Working Paper Middle East and Central Asia and Monetary and Capital Markets Departments Credit Market in Morocco: A Disequilibrium Approach Prepared by Laurence Allain and Nada Oulidi Authorized for distribution by Joël Toujas-Bernaté and Daniel Hardy March 2009

Abstract This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

In this paper we use a disequilibrium framework common in the “credit crunch” literature, first to examine whether the slow credit growth in Morocco during the rapid expansion of liquidity in the first half of the decade can be attributed to credit rationing, and second to investigate the role of asset price increases in the recent acceleration of credit growth. Our results do not support the credit rationing hypothesis in the first half of the decade. They do however, show that the recent increase in real estate prices stimulated credit supply and demand, with a stronger effect on the latter. JEL Classification Numbers: G21; G20 Keywords: Credit growth, credit demand, credit supply, real estate prices Authors’ E-Mail Addresses: lallain@imf.org; noulidi@imf.org

2 Contents Page

I. Introduction ............................................................................................................................3 II. Overview of Credit Market Developments ...........................................................................4 III. Literature Review.................................................................................................................7 IV. Estimation