Effects of financial innovations on the money demand function: a Canadian evidence

Kabir, Muhammad; Mangla, Inayat Ullah

doi:10.1080/00036848800000129

Cited by 5 publications

(9 citation statements)

References 12 publications

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“…The positive sign on Treasury bonds may indicate that a rise in long-term rates relative to short-term rates is viewed as a signal of higher expected inflation, leading investors to shift into short-term securities. The negative sign on the expected gain term also implies that a decrease in the expected future rate of Treasury bills 'This is consistent with the findings of Hafer and Hein (1984) and Kabir and Mangla (1988), who find that financial innovations have not increased the interest elasticity of money demand. Downloaded by [University of Sydney] at 01:21 05 January 2015 Table 2.…”

Section: Resultssupporting

confidence: 88%

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Derivative securities and cash market stability

Ely

1991

Applied Economics

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Section: Resultssupporting

confidence: 88%

“…Likelihood ratios are then con- (1960) hypothesize that the interest elasticity of money increased following growth in financial intermediaries. This relationship is more recently tested by Hafer and Hein (1984) and Kabir and Mangla (1988 …”

Section: Supply Of Time Depositsmentioning

confidence: 84%

Derivative securities and cash market stability

Ely

1991

Applied Economics

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“…The impact has seen a rise in money held in less liquid form and generally increasing overall money demand in the economy impacting macroeconomic variables (Mawejje & Lakuma, 2019;Asongu & Salahodjaev, 2022;GSMA, 2022). The study findings agree with previous studies namely Mwangi (2014) in Kenya, Nakamya (2014) in Uganda, Kasekende and Nikolaidou (2018) in Kenya and Wahyunda (2021) in Indonesia. All these studies attributed the positive result to an increase in the velocity of money and efficiency.…”

Section: Regression Analysis and Interpretationssupporting

confidence: 92%

Consumption Patterns of Starch Crops in Nigeria, Utilization, Skill Set, and Economic Potential of the Starch Sector

2024

JESD

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The unprecedented growth of mobile phones to make transactions has become a dependable form of payment for low-income earners living in rural and urban Kenya, increasing demand for goods and services and stimulating demand for money. However, its effect on money demand and subsequent effect on monetary policy is inconclusive as observed from past empirical studies. Furthermore, the rapid adoption of mobile money has generated new data needs and growing interest in understanding its contribution to the money demand function. It is against this background that time series data and ordinary least squares technique are applied to review the effect of mobile money on the demand for money in Kenya for the period from 2007 to 2020. The results of the regression model indicate that an increase in mobile money leads to an increase in demand for money in the economy. The study has established that mobile money has a substantial influence on money demand growth in Kenya attributed to the low transaction cost and payment habits of Kenyans, they are more convenient than carrying cash and business people feel safe managing cash flow. The empirical estimates of this study imply that the central bank and the financial stakeholders need to put in place policies such as providing affordable smartphones, cheap mobile internet services, licensing new mobile operators and reducing tax on transaction costs to increase money transfer through money mobile systems.

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“…With the appearance of electronic money and other modern financial transaction inter-medium, these effects will become more and more far-reaching (Gurley & Shaw, 1960;Marty, 1961;Silber, 1983;Cesarano, 1990). This paper considers establishing an extended model introducing a new variable reflecting financial innovations to a conventional money demand function for China to capture the effects of financial innovations (Kabir & Mangla, 1988;Simpson and Porter, 1980).…”

Section: Financial Innovation and Money Demandmentioning

confidence: 99%

“…However, because it includes very complicated contents, for example, introduction to new financial instruments, transaction technological innovation and policy change such as regulation or deregulation, how rightly to measure it has become a controversial problem. Kabir and Mangla (1988) introduced a ratchet and a dummy variable to capture the effects of innovation, respectively. Arrau and Gregorio (1993) modeled financial innovation as an unobservable shock that has permanent effects on money demand introducing seasonal dummy in regression.…”

Section: Based On Equationmentioning

confidence: 99%

The determinants of money demand in China

Dou

2018

Cogent Economics & Finance

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Money demand and its stability have a great impact on the economy of a country. Because China's financial and monetary system has been in reform, there are many uncertainties in money demand. Especially, China's money demand has its own particularity. This paper studies the determinants of China's money demand through building a linear econometric model and SVAR model. The empirical results show that China's money demand is mainly decided by income, interest rate and expected inflation rate. However, other factors, such as financial innovation, government debt, capital mobility and currency substitution, play a relatively small role, mainly because China's financial and monetary system has been under reform. The regression results of sample data from different periods show that money demand in China is unstable, indicating that China's macro-economy has certain risks. This finding suggests that China should adopt prudent financial and monetary policies to cope with the uncertainty of money demand in the future.

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Effects of financial innovations on the money demand function: a Canadian evidence

Cited by 5 publications

References 12 publications

Derivative securities and cash market stability

Derivative securities and cash market stability

Consumption Patterns of Starch Crops in Nigeria, Utilization, Skill Set, and Economic Potential of the Starch Sector

The determinants of money demand in China

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