The Effect of Money Supply on the Equity Market Index
Alkut university college journal,
2022, Volume 2022, Issue 2022, Pages 455-469
AbstractThe financial management working to studies the factors affecting the changes in the financial market index and leaves its impact in the evaluation process for the financial assets expressed by the movement of the index represented by (common stocks), which is the main tool for these indicators, as the result reflects the nature of the movement of economic activity of the country Depending on the level of change that occurs in the financial index, accordingly this variable represented by (money supply) was addressed because it is directly reflected on the market value of the stock, which affects the evaluation process, knowing that this variable witnesses wide fluctuations in some developing countries such as Iraq and instability as is the case with the Sultanate of Oman, and this gives a reading other than Accurate of the market value of the stock, whose fluctuations are reflected in the value of the financial indicator, This effect also appears when assessing the return and the risk in particular and on the evaluation of economic activity in general, which requires clarifying the nature of this effect in the financial markets of the countries concerned.The most prominent findings of the research showed a strong relationship between the money supply and the financial market index towards a direct trend for both samples, while the effect was different in nature between the Iraqi and Omani markets.As for the most prominent recommendations, they were represented by working to neutralize that effect by adopting a monetary policy that is compatible with the level of economic activity achieved to avoid an imaginary assessment of changes in the market index as a result of the expansion in the money supply.
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