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

Lahcen Bounader and Mohamed Doukali

No 2019/239, IMF Working Papers from International Monetary Fund

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.

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 (search for similar items in EconPapers)
Pages: 34
Date: 2019-11-01
New Economics Papers: this item is included in nep-ara, nep-mon and nep-sbm
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