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

Lingcai Liu, Taqadus Bashir (), Alaa Amin Abdalla (), Asma Salman, Carlos Samuel Ramos-meza (), Vipin Jain () and Malik Shahzad Shabbir ()
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Lingcai Liu: School of Accountancy, Anhui University of Finance and Economics
Taqadus Bashir: National Skills University
Alaa Amin Abdalla: Abu Dhabi University
Carlos Samuel Ramos-meza: Universidad Andina del Cusco
Vipin Jain: Teerthanker Mahaveer Institute of Management and Technology
Malik Shahzad Shabbir: University of Lahore

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2024, vol. 26, issue 2, No 2, 2775-2787

Abstract: 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.

Keywords: Bank deposits; Stock returns; Money supply endogeneity; Post-Keynesian theory; Economic growth; South Asian economies (search for similar items in EconPapers)
JEL-codes: E12 E17 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10668-022-02867-6

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