Determinants of money demand in Malaysia / Siti Aimira Akma Ahmad Ismadi

This study aims to examine the determinants of money demand (Ml, M2, M3) or commonly to be known as narrow money and broad money in Malaysia from 1987 to 2016. Ordinary Least Square (OLS) method is used to estimate the parameters of lending interest rate and GDP per capita in a linear regression model. The results show that the interest lending rates have a negative and significant influence on Ml, M2 and M3 in both linear and double log models. However, there is no significant relationship between GDP per capita and money demand. Thus, policy can be implied by adjusting interest rate to boost or slow down economic to fix unemployment or inflation.