Journal of
Economics and International Finance

  • Abbreviation: J. Econ. Int. Finance
  • Language: English
  • ISSN: 2006-9812
  • DOI: 10.5897/JEIF
  • Start Year: 2009
  • Published Articles: 348

Full Length Research Paper

The determinants of the demand for money in developed and developing countries

Yamden Pandok Bitrus
Department of Economics University of Jos, P. M. B. 2084, Jos, Plateau State, Nigeria.
Email: [email protected]

  •  Accepted: 15 November 2011
  •  Published: 31 December 2011

Abstract

 

This study examined the determinants of the demand for money in developing and the developed countries. The study employed a comparative analysis of the effectiveness of the determinants of the demand for money in both developing and developed countries. It was found out that income related factors or the scale variables are more effective in the developing countries while factors that work through the financial system are more effective in the developed economies and that stock market variables should not be ignored in modeling demand for money even in emerging economies since they constitute an alternative to holding cash. The level of the development of a country’s financial system determines which factors will be relevant targets in moping excess liquidity within an economy.

 

Key words: Demand for money, comparative analysis, excess liquidity.