The Impact of Financial Innovations on Monetary Policy Transmission in Morocco: A Theoretical and Comparative Approach (African Scientific Journal)

Summary

• The analysis considers the interest rate, bank lending, asset price, exchange rate and expectations channels, and does not establish a direct causal relationship between financial innovation and monetary transmission effectiveness in Morocco.p.3
• The study uses no original survey or econometric estimation and aims to clarify theoretical mechanisms and paths for later empirical verification.p.8
• Two theoretical mechanisms are distinguished: complementarity, where innovations improve bank services, and substitution, where new players compete with banks.p.19
• A BIS study by Cornelli et al. (2024) covering 19 countries over 2005–2020 finds FinTech credit reacts less, and not significantly, to monetary shocks than bank credit.p.21
• The World Bank indicated that 44% of Moroccan adults had an account in 2023, against 29% in 2017.p.24
• Use of digital payments in Morocco rose from 17% to 30% over the same period, according to Findex data.p.24

Key insights

1. The effect of financial innovation on monetary transmission is ambivalent and depends on diffusion, links with the banking system and the institutional environment.p.4
2. A technology can facilitate access to a financial service without leading to regular use, and operational efficiency does not guarantee better monetary transmission.p.9
3. Innovations may diversify funding sources but also shift part of intermediation to actors with different business models and liquidity constraints.p.14
4. Financial innovations can reduce some financial frictions but may create technological dependencies, operational risks and supervisory difficulties.p.16
5. Digital credit effects on transmission in Morocco remain to be documented rather than being already established.p.22
6. Morocco faces obstacles to digital payments including persistent cash use, limited acceptance of electronic payments and unequal access to financial services.p.20
7. Financial inclusion may modify the reach of innovations but is not sufficient proof of improved monetary effectiveness.p.25