The Impact of Debt Financing on Economic Growth
Rachid El Bettioui *
Department of Management, Ibn Zohr University, Morocco.
Aziz Ouia
Department of Economics and Management, Hassan II University, Casablanca, Morocco.
Mohamed Adaskou
Department of Economics and Management, Ibn Zohr University, Morocco.
*Author to whom correspondence should be addressed.
Abstract
Aims: This paper focuses on the issue of the impact of debt financing on economic growth, especially the long-term economic growth in Morocco.
Duration of Study: The public debt and economic growth evolution between 1984 and 2018.
Methodology: In order to answer our research question, we adopt a positivist epistemology with a deductive methodological approach through an econometric modeling. An autoregressive model “VAR” was applied using the stationarity and co-integration’s tests and causality’s tests.
Results: The findings revealed a significant positive relationship between public debt and economic growth in the period between 1984 and 2018. This is due to the good management strategy of the public debt and the good institutional governance. However, the level of the external public debt service has no significant impact on real growth rate.
Keywords: Finance, debt management, economic growth, investment, VAR model, Moroccan economy