The Moroccan financial system: The impact of financial convergence with European Union standards (Economic development)

The study aimed to determine the impact of financial reforms in the financial system in Morocco, in accordance with European standards, especially on economic development in Morocco between 1994 and 2022, as this study represents a summary of the recent improvements to the financial system that have occurred in Morocco. The study used secondary data from 1994 to 2022 obtained from World Bank data. The current study is an attempt to find answers to the following basic question: How did the development of the financial system in Morocco after 1994 affect financial convergence with European Union standards? GDP has been used in a similar manner to studies measuring economic growth as the dependent variable. In measuring financial system indicators, capital, labour, foreign trade and inflation were used, in addition to foreign direct investment as well. In the applied part of the study, ADF unit root tests were performed to determine whether the time series was stationary or not. Then, a VAR model was built for the financial system indicators and economic growth indicators, and the appropriate lags were determined through various tests. Although the series used are not level stationary, as they are integrated at the same level (all I(1)), cointegration analysis was performed to find out the direction of the long-run relationship between them. While we expected to find a positive relationship between financial system indicators and the economic growth of the Moroccan economy as a result of rapprochement with the European Union, no long-term relationship was found between the indicators of the study that were chosen and economic growth, as no cointegration relationship was found between the variables. Key Words: Inflation, Capital, Labor, Foreign Trade, And Foreign Direct Investment and Economic Development In Morocco