Bewertung des Arabian Journal of Business and Management

Does Deficit Financing Affect the Money Supply in a Country? Evidence from Bangladesh

Abstract

Uzzal Hossain* and Intekhab Alam

The main purpose of the study was to examine whether deficit financing and various components of financing affect the money supply in a country. A total of 20 years (from 2000 to 2020) time-series data has been utilized to examine whether there exists a significant relationship between deficit financing in national budget and money supply. It showed that there is a significant relationship between deficit financing and money supply. Moreover, foreign financing, financing through “National Savings Scheme” (NSS) and other non-bank financing are significantly related to money supply but there is no significant relationship between short-term and long-term borrowing and money supply.