The paradox of quantitative easing in emerging markets: risk, crowding-out, and the limits of monetary policy in Morocco

This paper investigates the paradoxical effects of quantitative easing (QE) in Morocco, challenging its direct transfer to emerging economies. We uncover a dominant risk channel, where QE unexpectedly tightens financial conditions, and a pronounced crowding-out of private credit. These findings, derived from a sectoral VAR analysis, demonstrate that financial structure and sovereign dominance critically alter policy transmission. The Moroccan case provides vital, generalizable insights. It cautions against standardized unconventional frameworks and underscores the need for context-specific, targeted designs to avoid counterproductive outcomes in similar bank-dominated, emerging markets.