The Money Supply Process in Bangladesh: An Econometric Analysis

Authors

  • Monir Uddin Ahmed SUST
  • Md. Moniruzzaman Muzib Mawlana Bhashani Science and Technology University
  • Subrata Saha Mawlana Bhashani Science and Technology University

DOI:

https://doi.org/10.18034/gdeb.v4i2.142

Keywords:

Board money, Interest Rate, Bank rate, Remittance and Inflation

Abstract

Bangladesh Bank (BB) conducts monetary policy through targeting broad (M2) and narrow (M1) money  as operating instruments that will be influenced by Real and Nominal interest rate, Remittance, Bank Rate, Deposit interest rate. The success of monetary policy in achieving its objectives depends on the degree of controllability of M1 and M2 by Bangladesh Bank. This paper empirically examines the money supply process on the basis by the mainstream of Post-liberalization period covering the sample period of 1972/73-2009/10. It also Examine how M1 and M2 will be affected by the Speed of adjustment that is equal to the difference between deposit interest rate and nominal interest rate. The money supply function for Bangladesh has been empirically tested by using annual time series data. We have found that remittance is the most significant factor that highly influenced on narrow and broad money supply in Bangladesh.

JEL Code: E31, E43, E51, E52

Metrics

Metrics Loading ...

Downloads

Download data is not yet available.

Author Biographies

  • Monir Uddin Ahmed, SUST

    Assistant Professor, Department of Economics, Shahjalal University of Science and Technology University, Sylhet-3114, BANGLADESH

  • Md. Moniruzzaman Muzib, Mawlana Bhashani Science and Technology University

    Assistant Professor, Department of Economics, Mawlana Bhashani Science and Technology University, Santosh, Tangail-1902, BANGLADESH

  • Subrata Saha, Mawlana Bhashani Science and Technology University

    Lecturer, Department of Economics, Mawlana Bhashani Science and Technology University, Santosh, Tangail-1902, BANGLADESH

References

Ahmed AA. 2009. The Effect of Timeliness Regulation of Corporate Financial Reporting: Evidence from Banking Sector of Bangladesh Accounting and Management Information Systems, 8, 216 - 235.

Ahmed AA. 2012. Disclosure of Financial Reporting and Firm Structure as a Determinant: A Study on the Listed Companies of DSE ASA University Review, 6, 43-60.

Ahmed, A. A. A. (2009), “Compliance of Financial Disclosure in Corporate Annual Reports of Banking Sector of Bangladesh”, Published Ph. D Dissertation, Rajshahi University.

Ali, M.M, (2001) Determinants of Supply of and Demand for Money: A case study of Bangladesh. Student Ways, Dhaka, Bangladesh.

Awan, A., & Imran, M. (2015). Factors Affecting Food Price Inflation in Pakistan. ABC Journal Of Advanced Research, 4(1), 74-88. doi:http://dx.doi.org/10.18034/abcjar.v4i1.595

Begum R, Ahmed AA and Neogy TK. 2012. Management Decisions and Univariate Analysis: Effects on Corporate Governance in Bangladesh Journal of Business Studies, 3, 87-115.

Developing Economies: The Venezuelan Case", in W. L. Coats, Money and Monetary Policy in Less Developed Countries, Pergaman Press Ltd, London.

Friedman, M. and Schwartz, A.J., (1963). “A Monetary History of the United States, 1867-1960”. National Bureau of Economic Research Studies in Business Cycles, No.12, University Press, Princeton, USA.

Gauger, J., (1998) "Economic Impacts on the Money Supply Process," Journal of Macroeconomics, 20(3): 553-577. DOI: https://doi.org/10.1016/S0164-0704(98)00072-X

Hassan, Basher, and Ihsan., (2004)."A Macroeconometric Model of the Bangladesh Economy and Its Policy Implications", The Journal of Developing Areas, Volume 38, DOI: https://doi.org/10.1353/jda.2005.0013

Islam, M.E., (2008) "Money Supply Process in Bangladesh: An Empirical Analysis", Bangladesh Bank's Working Paper Series 0805, Retrieved from www.bangladeshbank.org.bd

Johannes, J.M. and R.H. Rasche., (1981) "Can the Reserve Approach to Monetary Control really work?” Journal of Money, Credit and Banking, 13(3): 298:313. DOI: https://doi.org/10.2307/1991900

Kaldor, N., (1970) The Neo Monetarism, Lloyds Bank Review, No.97

Khatkhate, D.R, Galbis. V.G and Villanueva. D.D, (1980) "A Money Multiplier Model for

Momen, A., (1992) “Money, structuralism and the International Monetary Fund: An auto regression assessment of controversy”. The Bangladesh Development Studies, Vol. XX, No. 4.

Neogy TK and Ahmed AA. 2015. The Extent of Disclosure of Different Components of Disclosure Index: A Study on Commercial Banks in Bangladesh Global Disclosure of Economics and Business, 2, 100-110.

Osmani, S.R., Bakht, Z. and Anwaruzzaman, C., (1986). “The Impact of Fiscal policy on the monetary sector of Bangladesh”. Bangladesh Institute of Development Studies, Research Report no. 50.

Oyejide, T. A. (1974). “Controlling money supply in Less developed countries: The Case of Nigeria”, The Bangladesh Development Studies, Vol. XVI, No. 3.

Parikh, A. and Starmer, C., (1988). “The relationship between the money supply and prices in Bangladesh”, The Bangladesh Development Studies, Vol. XVI, No. 3.

Quader MT, Neogy TK and Ahmed AA. 2010. Econometric Growth Rates Analysis of Basic Bank Limited in Bangladesh: An Evaluation Development Compilation, 4, 48-60.

Roberts, S.M. and M.S. Margolis., (1978). "Control of Money Stock with a Reserve Aggregate", Journal of Money, Credit and Banking, 8(4): 457:476.

Sanusi, A. R., (2010). “An Empirical Analysis of the Money Supply Process in Ghana: 1983-2006”, Abuja Journal of Banking and Finance, 2(1): 115-128

Zaki, M. Y., (1995). “Forecasting the Money Multiplier and the Control of Money Supply in Egypt”, Journal of Development Studies, 32(1): 97-111. DOI: https://doi.org/10.1080/00220389508422403

--0--

Downloads

Published

2015-12-31

Issue

Vol. 4 No. 2 (2015): July - December Issue

Section

Articles

License

The CC BY-NC 4.0 license lets others remix, tweak, and build upon your work non-commercially, and although their new works must also acknowledge & be non-commercial, they don’t have to license their derivative works on the same terms.
|| View License Deed ||
|| View Legal Code ||
 
Publishing paper with Global Disclosure in Economics and Business means that the author or authors retain the copyright in the paper.
This journal is granted an exclusive noncommercial reuse license by the author(s), but the author(s) are able to put the paper onto a website, distribute it to colleagues, give it to students, use it in your thesis, etc, so long as the use is not directed at commercial advantage or toward private monetary gain.
The author(s) can reuse the figures and tables and other information contained in their paper published by Global Disclosure in Economics and Business in future papers or work without having to ask anyone for permission, provided that the figures, tables or other information that is included in the new paper or work properly references the published paper as the source of the figures, tables or other information, and the new paper or work is not direct at private monetary gain or commercial advantage.

How to Cite

Ahmed, M. U. ., Muzib, M. M. ., & Saha, S. . (2015). The Money Supply Process in Bangladesh: An Econometric Analysis. Global Disclosure of Economics and Business, 4(2), 137-142. https://doi.org/10.18034/gdeb.v4i2.142