morocco s banking system
Moroccan Banking System Introduction: Depository institutions, acting as financial intermediaries, perform the function of channeling saving funds from households viewed as net savers to businesses viewed as net borrowers. ... Morocco like other countries has its own banking system that is similar to the French one, but not quite as sophisticated. The Moroccan banking system continues to develop after witnessing many changes embedded in the Banking act of 1993. Such reforms have liberalized banking activities and made Moroccan banks more competitive. In the present time, there are 21 commercial banks in Morocco. ... The aim of this paper is to shed light on the evolution of the Moroccan banking system, and its development especially after introducing the reforms of 1993. ... The basic functions of “ La Banque d’Etat du Maroc “ were to issue money and thus control the monetary system in Morocco, make loans to the Government, and engage in banking activities. Many financial entities had been spawned during the protectorate, and contributed to a great extent to the development of the Moroccan banking system. ... The Moroccan banking sector was reorganized and restructured after the independence. ... During the 1980s and 1990s, many reforms had been introduced in order to make the Moroccan banking sector more flexible and dynamic. ... Furthermore, starting from 1991, the banking sector in Morocco has been liberalized in terms of loans contracted by companies and interest rates. II- Moroccan banking system: 1- Liberalization of banking system: Since 1991, Morocco has adopted a financial liberalization policy to continue its process of developing a relatively comprehensive banking system. This is due to IMF pressure to reform the financial activities and the need to restructure the Moroccan banking system. A big part of this financial liberalization focused on liberalizing the banking activities. ... Liberalization of interest rates Until 1991, the volume of loans and money supply was controlled directly by the old French-style “encadrement system”. This system limited banking activities by fixing the number of loans issued per year. ... For instance, in 1988 the Cook-Ratio was introduced to the Moroccan Banking System by the Bâle Comity. Cook ratio is a solvency ratio that aims at managing risk that can be resulted from banking activities. ... Authorities of Control in the Moroccan Banking System: 2-1 Ministry of Finance: It is the most powerful monetary authority in Morocco. ... The Banking Act of 1993 introduced three major constraints with respect to the decision taken by the Ministry of Finance regarding the monetary policy: When setting the interest rate of saving deposits, the Ministry of Finance Should first consult and have the opinion of the National Monetary and Saving Council When establishing any law regarding the credit institution, Ministry of Finance should consult the Credit Institution Committee. ... Despite these constraints, Ministry of Finance remains the main controller of the monetary policy in Morocco. 2-2 Bank Al-Maghrib: Bank Al-Maghrib is the central bank of Morocco. It regulates the banking system in the country. ... Bank Al-Maghrib is also responsible for monetary policy and the country’s exchange reserves. It controls banking activities and monitors specialized financial bodies in addition to its monopoly over the creation and the issuance of currency.