The Long And Short Relation Term Between Monetary Variable And Damascus Stock Sxchange Index


Abstract in English

This study is concerned in the long relation between monetary policy variable and Damascus stock exchange (DSE) index, In general, monetary policy transmission can affect the markets, so the stock market also effected by that, and this study is interested in this relation, so it start by made theoretical introduction about how can monetary variables effect the stock market index, then it follow the statistical methodology by use Autoregressive-Distributed Lag model (ARDL) to estimate the relation between independents variables which are money supply M1,M2,exchange rate EX, interest rate I, inflation INF, and dependent variables which is DSE index (M_I) The result, by using the Unrestricted error correction model (UECM) shows that there is positive relation in short and long term between money supply (M1) and DSE index, but it was and negative one in short term between M2 and DSE index, and became a positive in long term, and the relation was negative between inflation and DSE index in short and long term. There was a negative one with exchange rate in short and long term, and also negative one with interest rate. As conclusion, it should be necessary to improve the behavior of monetary policy to control all this variable in the way that made it has positive effects on DSE index.

References used

Kivilcim, Metin, Is there along relation between stock returns and monetary variables, evidence from an emerging market, applied financial economics, 2001
CHONG, CHIN SIENG, Linage of economic activity, stock price and monetary policy, the case of Malaysia, faculty of economic, university of Malaya,2002
LKhagvajav B MONETARY POLICY AND BOND MARKET DEVELOPMENT: A CASE OF MONGOLIA, central bank of Mongolia, 2007

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