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Can money supply endogeneity influence bank stock returns? A case study of South Asian economies

Author

Listed:
  • Lingcai Liu

    (School of Accountancy, Anhui University of Finance and Economics)

  • Taqadus Bashir

    (National Skills University)

  • Alaa Amin Abdalla

    (Abu Dhabi University)

  • Asma Salman

    (American University in the Emirates)

  • Carlos Samuel Ramos-meza

    (Universidad Andina del Cusco)

  • Vipin Jain

    (Teerthanker Mahaveer Institute of Management and Technology)

  • Malik Shahzad Shabbir

    (University of Lahore)

Abstract

This study tests the Post-Keynesian theory regarding bank stock returns and money supply endogeneity in the context of South Asian countries. This study uses panel data set from different sources over twenty-eight (28) years. The research uses different econometric techniques before switching to the generalized method of moments (GMM). The empirical results indicate a significant positive effect of net interest rate margins on bank loans in South Asian countries, whereas a positive relationship exists between foreign to local interest rates and the money supply. The findings depict that positive associations exist between inflation and money supply of banks, and between the money supply and bank stock returns. More specifically, the GMM results show that the money supply has positively affected the stock prices of banks suggesting strong policies for the stakeholders of these economies for the sake of economic growth and sustainable development.

Suggested Citation

  • Lingcai Liu & Taqadus Bashir & Alaa Amin Abdalla & Asma Salman & Carlos Samuel Ramos-meza & Vipin Jain & Malik Shahzad Shabbir, 2024. "Can money supply endogeneity influence bank stock returns? A case study of South Asian economies," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(2), pages 2775-2787, February.
    • Handle: RePEc:spr:endesu:v:26:y:2024:i:2:d:10.1007_s10668-022-02867-6
    DOI: 10.1007/s10668-022-02867-6
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    More about this item

    Keywords

    Bank deposits; Stock returns; Money supply endogeneity; Post-Keynesian theory; Economic growth; South Asian economies;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications

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