Estimation of factors affecting money multiplier in Sudan for the period 2012-2022

Abstract

The study aimed to measure the factors influencing the money multiplier in Sudan during the period 2012–2022. It employed descriptive and deductive methodologies, utilizing quarterly data for the money multiplier and its components(currency/demand deposits ratio, legal reserves/demand deposits ratio, excess reserves/demand deposits ratio, and time deposits/demand deposits ratio). The theoretical framework addressed the concept and model of the money multiplier. In the practical framework, the study analyzed data using the Autoregressive Distributed Lag(ARDL) model. The study concluded that there is a stable relationship between the components of the money multiplier and its value in the long run. Furthermore, it revealed a positive relationship between the time deposits/demand deposits ratio and the value of the money multiplier, while the remaining components exhibited a negative relationship with the money multiplier. The study recommended adopting the measurement model to estimate the money multiplier relationship in the long term and focusing on stabilizing the excess reserves ratio. It also emphasized improving electronic banking to reduce the currency outside the banking system.