IDEAS home Printed from https://ideas.repec.org/a/ris/ecoint/0082.html
   My bibliography  Save this article

Endogenous and Exogenous Money Concepts: An Empirical Investigation from the Kingdom of Saudi Arabia

Author

Listed:

Abstract

This study examines the long run equilibrium relationship between the demand for loans and deposits in the Kingdom of Saudi Arabia (KSA) using the Cointegration technique. In addition, the study investigates both the short run dynamics and the direction of the causality in the long and short run between the demand for loans and deposits in order to test the endogeneity/ exogeneity of money supply utilizing the vector error correction model (VECM) technique and the Wu-Hausman exogeneity test. The Cointegration test indicates the existence of long run equilibrium between loans and deposits. The causality tests indicate that there is a unidirectional causal relationship from deposits to loans in the long but not in the short run. In addition, the Wu-Hausman exogeneity test indicates that the null hypothesis of exogeneity of loans and GNPin the deposits equation could not be rejected. This result indicates that money supply is not endogenous since the demand for credit does not create money. Instead, one may conclude that money supply is mostly exogenously determined under the control of the Saudi Arabian Monetary Agency (SAMA).

Suggested Citation

  • Alqudair, Khalid H.A., 2006. "Endogenous and Exogenous Money Concepts: An Empirical Investigation from the Kingdom of Saudi Arabia," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 59(2), pages 143-159.
    • Handle: RePEc:ris:ecoint:0082
    as

    Download full text from publisher

    File URL: http://www.iei1946.it/RePEc/ccg/ALQUDAIR%20143_159.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:ecoint:0082. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Angela Procopio (email available below). General contact details of provider: https://edirc.repec.org/data/cacogit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.