Monetary policy and financial stability: empirical evidence from South Mediterranean countries


    Authors:

    Saoussen Ouhibi and Sami Hammami

    Citation:

    Ouhibi, S. and Hammami, S. (2015). Monetary policy and financial stability: empirical evidence from South Mediterranean countries. Bulletin of Business and Economics, 4(4), 198-213

    Abstract:

    This article examines the relationship between monetary policy and financial stability, in the experience of six south Mediterranean countries (Tunisia, Morocco, Egypt, Lebanon, Jordan and Turkey) over the period 2006M1-2013M12. This research analyze the role of monetary policy to contribute to financial stability using a structural vector Auto-regressive model .our empirical results show that the effectiveness of short –term interest rates in  affecting selected asset prices  depends on the strategy of monetary policy . For countries that adopt a flexible exchange rate regime (Tunisia, Marocco, Egypt and Turkey), the interest rate is conducive to financial stability. But, countries that adopt a fixed exchange rate regime (Jordan and Lebanon), the interest rate is not an effective tool for promoting financial stability.

    Keywords:

    monetary policy, financial stability, Structural Vector Autoregressive model.

    Jel Code:

    E40, E44

    Article Type:

    Research Paper

    Pages:

    198-213

    Publisher:

    Research Foundation for Humanity (RFH)


    Download PDF File | 651 Paper Views