An Asian Study of the Monetary and Banking Liquidity Impact on Share Prices
Following Friedman’s hypothesis that credit expansion will follow a monetary and liquidity binge, we used data from 1968-2012 in Asia (Japan, Korea, China and India) to explore this hypothesis. Our results from applying single and cointegration equations provided empirical support to the above hyp...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Universiti Utara Malaysia
2016-03-01
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| Series: | The International Journal of Banking and Finance |
| Subjects: | |
| Online Access: | https://www.e-journal.uum.edu.my/index.php/ijbf/article/view/8485 |
| _version_ | 1828069271252500480 |
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| author | Tin-fah Chungand Mohamed Ariff |
| author_facet | Tin-fah Chungand Mohamed Ariff |
| author_sort | Tin-fah Chungand |
| collection | DOAJ |
| description | Following Friedman’s hypothesis that credit expansion will follow a monetary and liquidity binge, we used data from 1968-2012 in Asia (Japan, Korea, China and India) to explore this hypothesis. Our results from applying single and cointegration equations provided empirical support to the above hypothesis. This liquidity binge following a monetary impact on share prices was tested in four major Asian economies. As per the theory’s prediction, monetary changes led to a positive banking liquidity effect, based on lengthy quarterly equations using the dynamic OLS method. We also showed that banking liquidity changes have a significant positive effect on share prices, after controlling for the effects of earning changes, regime changes and the global financial crisis. These findings, obtained after solutions to serious econometric issues in existing studies, appear to provide a clear verification of theory on the monetary effect on banking liquidity and banking liquidity’s effect on share prices.
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| first_indexed | 2024-04-11T00:15:30Z |
| format | Article |
| id | doaj.art-8b300a33c2334fb0b330472c71a8a179 |
| institution | Directory Open Access Journal |
| issn | 2811-3799 2590-423X |
| language | English |
| last_indexed | 2024-04-11T00:15:30Z |
| publishDate | 2016-03-01 |
| publisher | Universiti Utara Malaysia |
| record_format | Article |
| series | The International Journal of Banking and Finance |
| spelling | doaj.art-8b300a33c2334fb0b330472c71a8a1792023-01-09T03:08:08ZengUniversiti Utara MalaysiaThe International Journal of Banking and Finance2811-37992590-423X2016-03-01121An Asian Study of the Monetary and Banking Liquidity Impact on Share PricesTin-fah Chungand0Mohamed Ariff1Taylor’s UniversityUniversity Putra MalaysiaFollowing Friedman’s hypothesis that credit expansion will follow a monetary and liquidity binge, we used data from 1968-2012 in Asia (Japan, Korea, China and India) to explore this hypothesis. Our results from applying single and cointegration equations provided empirical support to the above hypothesis. This liquidity binge following a monetary impact on share prices was tested in four major Asian economies. As per the theory’s prediction, monetary changes led to a positive banking liquidity effect, based on lengthy quarterly equations using the dynamic OLS method. We also showed that banking liquidity changes have a significant positive effect on share prices, after controlling for the effects of earning changes, regime changes and the global financial crisis. These findings, obtained after solutions to serious econometric issues in existing studies, appear to provide a clear verification of theory on the monetary effect on banking liquidity and banking liquidity’s effect on share prices. https://www.e-journal.uum.edu.my/index.php/ijbf/article/view/8485Money supplyLiquidityShare pricesCausalityDynamic ordinary least squaresCointegration |
| spellingShingle | Tin-fah Chungand Mohamed Ariff An Asian Study of the Monetary and Banking Liquidity Impact on Share Prices The International Journal of Banking and Finance Money supply Liquidity Share prices Causality Dynamic ordinary least squares Cointegration |
| title | An Asian Study of the Monetary and Banking Liquidity Impact on Share Prices |
| title_full | An Asian Study of the Monetary and Banking Liquidity Impact on Share Prices |
| title_fullStr | An Asian Study of the Monetary and Banking Liquidity Impact on Share Prices |
| title_full_unstemmed | An Asian Study of the Monetary and Banking Liquidity Impact on Share Prices |
| title_short | An Asian Study of the Monetary and Banking Liquidity Impact on Share Prices |
| title_sort | asian study of the monetary and banking liquidity impact on share prices |
| topic | Money supply Liquidity Share prices Causality Dynamic ordinary least squares Cointegration |
| url | https://www.e-journal.uum.edu.my/index.php/ijbf/article/view/8485 |
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