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Does financial liberalisation boost money demand? Evidence from Sri Lanka

Journal Article


Abstract


  • This paper examines the role of financial liberalization on money demand in Sri

    Lanka covering the duration over 1963 to 2008. Taking the structural break into

    consideration, it is detected that financial liberalization does not have such a strong

    positive association with money demand as suggested by McKinnon-Shaw hypothesis;

    rather it is negative in both long-run and short-run. However, we found strong evidence

    that the exchange rate and interest rate reform initiated in 1977 has a substantial

    contribution to expand both narrow and broad money demand.

UOW Authors


Publication Date


  • 2013

Citation


  • Paudel, R. & Perera, N. (2013). Does financial liberalisation boost money demand? Evidence from Sri Lanka. Indian Journal of Economics and Business, 12 (2), 223-242.

Ro Metadata Url


  • http://ro.uow.edu.au/gsbpapers/422

Number Of Pages


  • 19

Start Page


  • 223

End Page


  • 242

Volume


  • 12

Issue


  • 2

Place Of Publication


  • http://ijeb.com/cms/issues/12-2-4/12-2-4-6/

Abstract


  • This paper examines the role of financial liberalization on money demand in Sri

    Lanka covering the duration over 1963 to 2008. Taking the structural break into

    consideration, it is detected that financial liberalization does not have such a strong

    positive association with money demand as suggested by McKinnon-Shaw hypothesis;

    rather it is negative in both long-run and short-run. However, we found strong evidence

    that the exchange rate and interest rate reform initiated in 1977 has a substantial

    contribution to expand both narrow and broad money demand.

UOW Authors


Publication Date


  • 2013

Citation


  • Paudel, R. & Perera, N. (2013). Does financial liberalisation boost money demand? Evidence from Sri Lanka. Indian Journal of Economics and Business, 12 (2), 223-242.

Ro Metadata Url


  • http://ro.uow.edu.au/gsbpapers/422

Number Of Pages


  • 19

Start Page


  • 223

End Page


  • 242

Volume


  • 12

Issue


  • 2

Place Of Publication


  • http://ijeb.com/cms/issues/12-2-4/12-2-4-6/