Domestic Credit and the Balance of Payment Deficit: Evidence from a Heterogeneous Panel of Five Selected Mena Countries

This study investigated the relationship between domestic credit and net foreign assets in the long run through the monetary approach to the balance of payments (MABP) for a panel of five selected MENA countries (Jordan, Egypt, Algeria, Morocco, Tunisia) during the period extending from 1980 to 2019...

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Autores principales:	Ghilous Azeddine, Ziat Adel
Formato:	article
Lenguaje:	EN
Publicado:	Sciendo 2021
Materias:	balance of payments monetary approach cross-sectional dependence heterogeneous panel augmented mean group (amg) c31 c33 e12 e42 Business HF5001-6182 Economics as a science HB71-74
Acceso en línea:	https://doaj.org/article/c48a35421b6f49e6a7d12b89d0b206b5
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spelling	oai:doaj.org-article:c48a35421b6f49e6a7d12b89d0b206b52021-12-05T14:11:06ZDomestic Credit and the Balance of Payment Deficit: Evidence from a Heterogeneous Panel of Five Selected Mena Countries2256-039410.2478/eb-2021-0009https://doaj.org/article/c48a35421b6f49e6a7d12b89d0b206b52021-01-01T00:00:00Zhttps://doi.org/10.2478/eb-2021-0009https://doaj.org/toc/2256-0394This study investigated the relationship between domestic credit and net foreign assets in the long run through the monetary approach to the balance of payments (MABP) for a panel of five selected MENA countries (Jordan, Egypt, Algeria, Morocco, Tunisia) during the period extending from 1980 to 2019. It employed the second-generation methods in panel data analysis to deal with cross-sectional dependence (CSD) and slope heterogeneity. According to the panel results for Common Correlated Effects Mean Group (CCEMG) and Augmented Mean Group (AMG) estimators, domestic credit has a significant negative impact on net foreign assets in the long run. The country-specific results for the AMG estimator strongly supported the MABP propositions in Jordan, Morocco, and to a lesser extent, in Egypt and Algeria. As for Tunisia, the results do not conform with what MABP predicted. The implicit conclusion is that an increase in domestic credit causes a continuous loss of net foreign assets in Egypt, Jordan, Morocco, and Algeria. Thus, monetary authorities should formulate an appropriate monetary policy to control the domestic credit creation as a mechanism toward improving the balance of payment (BOP) position. Furthermore, the policymakers should concentrate on other policy instruments to correct the BOP deficit rather than focusing on monetary tools, especially in Tunisia, where the findings showed that BOP was not a monetary phenomenon.Ghilous AzeddineZiat AdelSciendoarticlebalance of paymentsmonetary approachcross-sectional dependenceheterogeneous panelaugmented mean group (amg)c31c33e12e42BusinessHF5001-6182Economics as a scienceHB71-74ENEconomics and Business, Vol 35, Iss 1, Pp 133-148 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	balance of payments monetary approach cross-sectional dependence heterogeneous panel augmented mean group (amg) c31 c33 e12 e42 Business HF5001-6182 Economics as a science HB71-74
spellingShingle	balance of payments monetary approach cross-sectional dependence heterogeneous panel augmented mean group (amg) c31 c33 e12 e42 Business HF5001-6182 Economics as a science HB71-74 Ghilous Azeddine Ziat Adel Domestic Credit and the Balance of Payment Deficit: Evidence from a Heterogeneous Panel of Five Selected Mena Countries
description	This study investigated the relationship between domestic credit and net foreign assets in the long run through the monetary approach to the balance of payments (MABP) for a panel of five selected MENA countries (Jordan, Egypt, Algeria, Morocco, Tunisia) during the period extending from 1980 to 2019. It employed the second-generation methods in panel data analysis to deal with cross-sectional dependence (CSD) and slope heterogeneity. According to the panel results for Common Correlated Effects Mean Group (CCEMG) and Augmented Mean Group (AMG) estimators, domestic credit has a significant negative impact on net foreign assets in the long run. The country-specific results for the AMG estimator strongly supported the MABP propositions in Jordan, Morocco, and to a lesser extent, in Egypt and Algeria. As for Tunisia, the results do not conform with what MABP predicted. The implicit conclusion is that an increase in domestic credit causes a continuous loss of net foreign assets in Egypt, Jordan, Morocco, and Algeria. Thus, monetary authorities should formulate an appropriate monetary policy to control the domestic credit creation as a mechanism toward improving the balance of payment (BOP) position. Furthermore, the policymakers should concentrate on other policy instruments to correct the BOP deficit rather than focusing on monetary tools, especially in Tunisia, where the findings showed that BOP was not a monetary phenomenon.
format	article
author	Ghilous Azeddine Ziat Adel
author_facet	Ghilous Azeddine Ziat Adel
author_sort	Ghilous Azeddine
title	Domestic Credit and the Balance of Payment Deficit: Evidence from a Heterogeneous Panel of Five Selected Mena Countries
title_short	Domestic Credit and the Balance of Payment Deficit: Evidence from a Heterogeneous Panel of Five Selected Mena Countries
title_full	Domestic Credit and the Balance of Payment Deficit: Evidence from a Heterogeneous Panel of Five Selected Mena Countries
title_fullStr	Domestic Credit and the Balance of Payment Deficit: Evidence from a Heterogeneous Panel of Five Selected Mena Countries
title_full_unstemmed	Domestic Credit and the Balance of Payment Deficit: Evidence from a Heterogeneous Panel of Five Selected Mena Countries
title_sort	domestic credit and the balance of payment deficit: evidence from a heterogeneous panel of five selected mena countries
publisher	Sciendo
publishDate	2021
url	https://doaj.org/article/c48a35421b6f49e6a7d12b89d0b206b5
work_keys_str_mv	AT ghilousazeddine domesticcreditandthebalanceofpaymentdeficitevidencefromaheterogeneouspaneloffiveselectedmenacountries AT ziatadel domesticcreditandthebalanceofpaymentdeficitevidencefromaheterogeneouspaneloffiveselectedmenacountries
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Domestic Credit and the Balance of Payment Deficit: Evidence from a Heterogeneous Panel of Five Selected Mena Countries

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