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We are grateful to Mohamed Daїri, Henri Ghesquiere, Oussama Kanaan, Karim Nashashibi, Saleh Nsouli, Sadok Rouai, and V. Sundararajan for helpful comments; Peter Kunzel’s statistical assistance is very much appreciated. The views and opinions expressed in this paper are those of the authors only and are not to be taken to represent the views and opinions of the International Monetary Fund.
McKinnon (1973) and Shaw (1973) highlighted the role of the financial sector in mobilizing savings and hence in contributing to investment and growth. De Gregorio and Guidotti (1992) and King and Levine (1993) concluded that the development of bank credit has an important impact on growth, while Anderson (1987), Gallagher (1991) and Odedokun (1992) found important effects of financial variables on economic efficiency (proxied by the incremental capital-output ratio).
In 1975, Brazil liberalized the financial sector ahead of full macroeconomic stabilization.
Bisat, et al. (1992).
This paper does not cover the reform of insurance companies, consumer credit institutions, social security and pension funds, and leasing companies.
Nonetheless, in Morocco and Tunisia certain prudential rules limiting exposure of a bank to a single borrower, a system for classifying and provisioning of bad loans, and a minimum ratio between liquid assets and liabilities were in place throughout the periods considered.
Banque nationale pour le développement économique; Crédit immobilier et hôtelier; and Caisse nationale de crédit agricole.
In 1995, a number of private companies were removed from the listing on the Casablanca stock exchange because of failure to meet disclosure requirements.
In September 1995, a new private bank was chartered (Union Bank), along with the Caisse nationale de mutualité agricole, owned by private agricultural cooperatives.
Offshore banks were subject to the same foreign exchange regulations as Tunisian domestic banks for resident operations.
The average return on bank assets, which may be an indicator of an oligopolistic structure is estimated at 1.3 percent for private banks in Tunisia, and 1.7–2.9 percent for major private banks in Morocco in 1995, compared to an average of 0.7 percent in the OECD countries (World Bank (1995)).
The rating of Morocco’s sovereign debt is being prepared.
Per capita income and demographic factors have often been found to be significant determinants of saving in developing countries.
Johnston and Pazarbasioglu (1995) have identified these variables as the main channels through which financial reforms affect savings, investments, and growth.
Even though partial information on credit to public enterprises exists, there is no complete data set on credit to the private sector excluding public enterprises.
For a discussion of the impact of the introduction of treasury bills on the demand for money in Tunisia, see Treichel (1997). Too few observations are available for the ratio of M4 (which includes treasury bills) to GDP in order to estimate the link with savings
Even though credit to the government has been very small and falling in Tunisia, credit to public enterprises is still a large component of total credit to the economy.
Tunisia, which has relatively low external debt, now finances a large part of its budget deficit by issuing long-term paper on international financial markets.