An Analytical Framework for the Introduction of Overnight Index Swaps to Transform Risk Management in Morocco's Financial Market: Volatility or Stability
An Analytical Framework for the Introduction of Overnight Index Swaps to Transform Risk Management in Morocco's Financial Market: Volatility or Stability

Author(s): Ahmed Aboulhassane, Azzeddine Allioui
Subject(s): Business Economy / Management, Financial Markets
Published by: Scientia Moralitas Research Institute
Keywords: Overnight Index Swaps (OIS); Moroccan Financial Market; Moroccan Overnight Index Average; ARIMA; SARIMA; Risk Management; Financial Derivatives; Market Stability;
Summary/Abstract: This study explores the introduction of Overnight Index Swaps (OIS) to the Moroccan financial market. OIS are financial derivatives that involve the exchange of fixed interest rate payments for floating payments linked to an overnight index, and they are widely used for interest rate risk management. The primary goal of this research is to assess the feasibility and potential impact of OIS in Morocco through a thorough analysis of their characteristics, benefits, and the regulatory environment. A detailed examination of OIS reveals their potential advantages for Moroccan businesses and financial institutions, including improved interest rate risk management and increased liquidity. The study also evaluates the current regulatory framework in Morocco, assessing its readiness to support the introduction of OIS, and identifies key market participants and their needs for such financial instruments. To provide insights into market dynamics and future trends, the study employs quantitative models such as ARIMA (Auto Regressive Integrated Moving Average), SARIMA (Seasonal ARIMA), and the Simple Moving Average (SMA) method. These models are used to analyze historical interest rate data, identify patterns, and forecast future movements, thereby aiding in understanding the potential impact of OIS on the Moroccan market. The findings suggest that OIS could significantly enhance risk management practices and contribute to market stability in Morocco. By providing effective hedging against interest rate volatility, OIS can reduce financial uncertainty for institutions and corporations. Additionally, the introduction of OIS could attract more foreign investment and stimulate the growth of Morocco's financial derivatives market.

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