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Is money neutral in stock market? The case of Malaysia

  • Chin-Hong Puah

    ()

    (Faculty of Economics and Business, Universiti Malaysia Sarawak)

  • Muzafar Shah Habibullah

    ()

    (Faculty of Economics and Management, Universiti Putra Malaysia)

  • Venus Khim-Sen Liew

    ()

    (Faculty of Economics and Business, Universiti Malaysia Sarawak)

The objective of this study is to examine whether the notion of monetary neutrality holds in Malaysian stock market. Our findings indicate that there is considerable evidence against the long-run neutrality (LRN) of money in Malaysian stock market. The important implication is that the stock market is inefficient with respect to money supply. Agents might have the opportunity to gain excess profit from the stock market using the information on changes in the stock of money to predict the movements in stock indexes.

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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 30 (2010)
Issue (Month): 3 ()
Pages: 1852-1861

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Handle: RePEc:ebl:ecbull:eb-09-00395
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  9. Puah, Chin-Hong & Habibullah, Muzafar Shah & Lim, Kian-Ping, 2006. "Testing long-run neutrality of money: evidence from Malaysian stock market," MPRA Paper 37676, University Library of Munich, Germany.
  10. Rahmi Yamak & Yakup Kucukkale, 2002. "Anticipated Money Growth and Stock Prices in Turkey," Macroeconomics 0211010, EconWPA.
  11. Serletis, Apostolos & Koustas, Zisimos, 1998. "International Evidence on the Neutrality of Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(1), pages 1-25, February.
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