Financial Sectors Reform and Economic Growth in Morocco: An Empirical Analysis

This study analyses the impact of financial sector reforms from the early 1990s on promoting economic growth in Morocco. To derive feasible policy implications, we estimate not only pooled regressions, but also variance decompositions of GDP growth rates to examine what proxy measures of financial development are most important in economic growth over time and how much they contribute to economic growth across geographic regions and income groups. We find strong linkages between financial development and economic growth in high-income OECD countries, but not in East Asia and Pacific, South Asian and Sub-Saharan African regions, in the short run. Therefore, it may be necessary for Morocco to make different policy efforts to achieve steady economic growth in the long run.