Research Article
Ouhibi S and Hammami S
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 analyzes the monetary policy contribution to financial stability using a structural vector Auto-regressive model. Our empirical results show that the short term interest rates is affect the selected asset prices depends on the strategy of the monetary policy. For countries that adopt a flexible exchange rate regime such as Tunisia, Morocco, Egypt and Turkey, the interest rate is conducive to financial stability. However in countries that adopt a fixed exchange rate regime such as Jordan and Lebanon, the interest rate is not an effective tool for promoting financial stability.