TY  - BOOK
AU  - Parlan,Emrah
TI  - The effect of global money supply on the M.S.C.I. world stock price index based on O.E.C.D. data
PY  - 2020///
CY  - Cyprus 
PB  - Cyprus International University
KW  - Money supply
N1  - Thesis (M.S.) - Cyprus International University. Institute for Graduate Studies and Research Accounting and Finance DepartmentIn this study, the expansion in money supply on a global scale, and the implication of change in the money aggregates over the stock prices are analyzed. This study planned to reach evidence of relation global money supply and global stock prices.
In accordance with this purpose, the O.E.C.D. M3 Broad Money index has been used to exemplify the money supply. On the other hand, the M.S.C.I. World Stock Price index is chosen among global stock indexes for representing global stock prices. The relationship between the O.E.C.D.  M3 Broad Money index and M.S.C.I. World Stock Price index analyzed with the Markov Switching Regression method for assessing the relationship in different regimes or different periods. Hence, this study is essential due to focusing on analyzing the impact  of the central banks' expansionary monetary policies, which observed expansionary trend from the 2000s, over the stock prices and stock indexes in the global scope. Therefore, the study detected and obtained evidence about the link between the O.E.C.D. M3 Broad Money index and the M.S.C.I. World Stock Price index with the stated methodology. Obtained evidence indicates that during the expansionary monetary regimes, the O.E.C.D. Broad Money M3 index has a negative impact on the M.S.C.I. World Stock Price index, above%5 significant level. The results show that a %1 charge for the O.E.C.D Broad Money M3 index is associated with a -4% change in the M.S.C.I. World Stock Price Index, during the expansionary monetary regimes, ceteris paribus. However, obtained evidence indicates that during the normal periods, the O.E.C.D. Broad Money M3 index has a positive impact on the M.S.C.I. World Stock Price index, above 5% significant level and close to 1% significant level. The results show that a 1% change for the O.E.C.D. Broad Money M3 index is associated 1% change in on the M.S.C.I. World Stock Price Index, during the standard monetary regimes, ceteris paribus.
In conclusion, in light of the evidence obtained, an inverse relationship comes up between global money supply and global stock prices in periods that are applied to the expansionary monetary policy. However, with the starting of the normalization, a combination of the increased risk appetite of investors and the increased money supply reverses the negative relationship. These findings signal to central bank governors about the relation of global money supply and global stock prices in different states, which can be used to predict the effect of future policy acts
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