International Journal of Management, Accounting and Economics
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Volume 7, No. 7, July 2020 Pages: 400 - 415
Determining Factors for Malaysian Money Demand Function
Muhammad Ahmad Mazher
Corresponding author:
economist[dot]uniklmy[at]gmail[dot]com
Abstract:
Our study based on determining factors that affect the function of demand for money in the Malaysian economy over 1970-2018 based on time-series data collected from WDI (World Bank). We tacitly include real CPI, real interest rate, financial innovation, real GDP, and implied the ARDL Bound tests. De-rived from empirical evidence, we revealed that financial innovation has quite a significant and positive impact on the short-term. In contrast, real GDP has a negative and meaningful relationship with real money demand function in Ma-laysia. The official real exchange rate has a positive and significant relationship with real-money demand, with an increase in the real exchange rate of one unit, boosting the long-term function with money demand by 0.97. Negative and significant relationships revealed that by raising 1% real GDP dissecting to de-crease real money demand by 0.6395 in the Malaysian economy. Eventually, real money demand anticipated 13.0796 once all independent variable in the Malaysian economy is zero.
Keywords:
Real Money Demand, Financial Innovation, RGDP
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