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The Relationship Between the Financial Innovation and the Money Supply: Empirical Study on the Maghreb Countries

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  • Djaballah Mustapha

    (University of Mohamed Boudiaf, Msila, Algeria)

Abstract

This article examines the relationship between money supply and financial innovation in the Maghreb countries over the period of 1980–2018 for a large annual data set on five Maghreb countries using the panel autoregressive distributed lag model (PANEL-ARDL). The results obtained from the cointegration technique of Pesaran and Shin (1999) confirm that a long-term relationship exists between M2 and its determinants: GDP, inflation, and the credit interest rate. Above all, the results of the research show that mobile money positively and significantly influences the money supply both in the strict sense and in the broad sense. Also, the number of ATMs positively but not significantly influences the supply of money in the broad sense. Failure to take into account the expansion of the number of ATMs can therefore lead to a poor specification of the money supply, and monetary authorities need to explicitly integrate the effect of financial innovation for effective policy action to stabilize economies.

Suggested Citation

  • Djaballah Mustapha, 2020. "The Relationship Between the Financial Innovation and the Money Supply: Empirical Study on the Maghreb Countries," Economics and Business, Sciendo, vol. 34(1), pages 168-178, February.
    • Handle: RePEc:vrs:ecobus:v:34:y:2020:i:1:p:168-178:n:2
    DOI: 10.2478/eb-2020-0012
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    More about this item

    Keywords

    Financial innovation; Maghreb economics; Money supply function; Panel-ARDL;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E53 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Deposit Insurance
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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