A Dynamic Analysis of the Relationship Between Money Supply and Bank Deposits in the Libyan Economy During the Period 2004–2024
DOI:
https://doi.org/10.58987/dujhss.v4i8.297Keywords:
Money Supply, Bank Deposits, Libyan Economy, Monetary PolicyAbstract
This study aims to analyze the dynamic relationship between money supply (MS2) and the volume of bank deposits (BD) in the Libyan economy using a Vector Auto regression (VAR) model, based on time series data during 2004M1 to2024M12. The study employed Impulse Response Functions (IRFs) to examine the nature of own shocks between (MS2) and (BD). In addition, Variance Decompositions (VDs) analysis is used to measure the relative contribution of each variable to its own fluctuations and to those of the other variable. The results indicate that the relationship between (MS2) and (BD) is short-run, with no evidence of a long-run relationship according to the cointegration test. The findings found that the effects of shocks gradually dissipate over time, and it also reveal that each variable is largely explained by its own innovations, although (MS2) exerts a relatively stronger influence on (BD) than vice versa. These results can be interpreted considering the structural characteristics of the Libyan economy, where the banking sector suffers from liquidity shortage and withdrawal restrictions, reducing the ability of deposits perform their role as an effective monetary intermediary. Accordingly, the study recommends enhancing the effectiveness of monetary policy and developing the banking sector in order to improve the transmission mechanism between (MS2) and (BD).
References
المراجع العربية
التلاوي، س.، والباوندي، م. (2021). أثر عرض النقود على النمو الاقتصادي في ليبيا خلال الفترة (1966–2020). مجلة العلوم الاقتصادية
https://sjg.elmergib.edu.ly/index.php/sjg/article/view/144/99
الخفاجي، أسماء هادي نعمة. (2018). أثر تغيرات أسعار الفائدة في الاستثمار المصرفي عبر آلية جذب الودائع: دراسة تحليلية في المصارف التجارية العراقية للمدة 2004–2017 )رسالة ماجستير). جامعة كربلاء.
الديغه، عبد الله محمد، وشادي، سليم عبد الله. (2023). العلاقة السببية بين عرض النقود والتضخم في ليبيا باستخدام نموذج VAR خلال الفترة (1990–2020). مجلة البيان العلمية.
https://journal.su.edu.ly/index.php/bayan/article/view/1855
الضراط،ع.، وشاكة، ع. (2024). قياس العلاقة بين التوسع المالي وعرض النقود في ليبيا خلال الفترة (1980–2020). مجلة الاقتصاد والسياسات.
https://journals.misuratau.edu.ly/eps/ojs/index.php/eps/article/view/96/49
عبدالمجيد، محمد قاسم، وفرج، محمد أبو خزام، والواسع، صالح علي. (2022). تحليل العلاقة بين العوامل المسببة لأزمة السيولة النقدية بالمصارف التجارية الليبية: دراسة ميدانية على عينة من أفرع المصارف التجارية العاملة بمدينة سرت. مجلة جامعة سرت للعلوم الإنسانية.
https://elc2.su.edu.ly/index.php/humanities/en/article/view/53
المشيطي، أ. (2023). أدوات السياسة النقدية والتضخم في ليبيا خلال الفترة (1990–2020). مجلة دراسات العلوم الإنسانية.
https://dujhss.uod.edu.ly/index.php/dujhss/en/article/view/121/118
مزيكه، فرج أحمد، والسماوي، سلاف بن عمر، وشلاوح، فرج محمد. (2021). أثر استقرار الودائع المصرفية على الأداء المالي للمصارف التجارية الليبية خلال الفترة (2001–2018): مصرف التجارة والتنمية أنموذجاً. مجلة الجامعة الأسمرية. متاح على:
https://journals.asmarya.edu.ly/jau/index.php/jau/article/view/393
المراجع الأجنبية
Adrian, T., & Shin, H. S. (2010). Liquidity and leverage. Journal of Financial Intermediation, 19(3), 418–437. https://doi.org/10.1016/j.jfi.2008.12.002
Allen, F., & Gale, D. (2004). Financial intermediaries and markets. Econometrica, 72(4), 1023–1061. https://doi.org/10.1111/j.1468-0262.2004.00525.x
Al-Smadi, M. (2020). The relationship between money supply and macroeconomic variables using ARDL approach [PDF].
Arnabal, L. R., Camara, S., & Dassatti, C. (2025). Global banks’ spillovers to emerging markets: Macro to micro transmission [Working paper]. arXiv. https://arxiv.org/abs/2512.01132
Badar, M. (2026). Impact of monetary shocks on bank loans and deposits: Evidence from banking characteristics in an emerging economy. Reporting and Accountability Review, 3(1), 8–20.
Bernanke, B. S., & Blinder, A. S. (1988). Credit, money, and aggregate demand. The American Economic Review, 78(2), 435–439. https://www.jstor.org/stable/1818124
Biondi, Y., & Zhou, F. (2017). Interbank credit and the money creation process: A systemic perspective on financial stability. arXiv. https://arxiv.org/pdf/1702.08774
Brunnermeier, M. K., & Sannikov, Y. (2014). A macroeconomic model with a financial sector. The American Economic Review, 104(2), 379–421. https://doi.org/10.1257/aer.104.2.379
Calomiris, C. W., & Kahn, C. M. (1991). The role of demandable debt in structuring optimal banking arrangements. The American Economic Review, 81(3), 497–513. https://www.jstor.org/stable/2006515
Chen, H., & Filippin, M. E. (2026). Central bank digital currency: Demand shocks and optimal monetary policy [Working paper]. arXiv. https://arxiv.org/abs/2507.15048
Diamond, D. W., & Dybvig, P. H. (1983). Bank runs, deposit insurance, and liquidity. Journal of Political Economy, 91(3), 401–419. https://doi.org/10.1086/261155
Disyatat, P. (2011). The bank lending channel revisited. Bank for International Settlements. https://www.bis.org/publ/work297.pdf
Dornbusch, R., Fischer, S., & Startz, R. (2014). Macroeconomics (12th ed.). McGraw-Hill Education.
Drechsler, I., Savov, A., & Schnabl, P. (2017). The deposits channel of monetary policy. The Quarterly Journal of Economics, 132(4), 1819–1876. https://doi.org/10.1093/qje/qjx019
Faure, A. P., & Gersbach, H. (2021). Money creation approach to banking. Annals of Finance. https://link.springer.com/article/10.1007/s10436-021-00385-5
Gambacorta, L. (2005). Inside the bank lending channel. European Economic Review, 49(7), 1737–1759. https://doi.org/10.1016/j.euroecorev.2004.05.004
Gertler, M., & Karadi, P. (2015). Monetary policy surprises, credit costs, and economic activity. American Economic Journal: Macroeconomics, 7(1), 44–76. https://doi.org/10.1257/mac.20130329
Guth, M. (2018). Heterogeneous effects of unconventional monetary policy on loan demand and supply: Insights from the bank lending survey [Working paper]. arxiv. https://arxiv.org/abs/1807.04161
Ivashina, V., & Scharfstein, D. (2010). Bank lending during the financial crisis of 2008. Journal of Financial Economics, 97(3), 319–338. https://doi.org/10.1016/j.jfineco.2009.12.001
Jakab, Z., & Kumhof, M. (2015). Banks are not intermediaries of loanable funds—and why this matters (Working Paper No. 529). Bank of England. https://www.bankofengland.co.uk/working-paper/2015/banks-are-not-intermediaries-of-loanable-funds
Kashyap, A. K., & Stein, J. C. (2000). What do a million observations on banks say about the transmission of monetary policy? American Economic Review, 90(3), 407–428. https://doi.org/10.1257/aer.90.3.407
Kishan, R. P., & Opiela, T. P. (2000). Bank size, bank capital, and the bank lending channel. Journal of Money, Credit and Banking, 32(1), 121–141. https://www.jstor.org/stable/2601095
Mishra, P., Montiel, P., & Spilimbergo, A. (2012). Monetary transmission in low-income countries: Effectiveness and policy implications. IMF Economic Review, 60(2), 270–302. https://www.imf.org/external/pubs/ft/wp/2012/wp12143.pdf
Opoku-Asante, K., Owusu Kwaning, C., Arhenful, P., Ntiamoah, J., & Asigbe-Tsriku, G. (2023). The relationship between bank deposits and macroeconomic variables in Ghana: A co-integration approach. Journal of Economics and Behavioral Studies. https://ojs.amhinternational.com/index.php/jebs/article/view/3376/2134
Srivastava, N., Tripe, D., Haq, M., & Yuen, M. K. (2026). Financial market development and bank deposits. Journal of International Financial Markets, Institutions and Money. https://www.sciencedirect.com/science/article/pii/S1042443125001684
Wang, H. (2025). Modeling bank systemic risk of emerging markets under geopolitical shocks: Empirical evidence from BRICS countries [Working paper]. arXiv. https://arxiv.org/abs/2512.20515
Werner, R. A. (2020). Money creation within the macroeconomy. International Review of Financial Analysis. https://www.sciencedirect.com/science/article/pii/S1057521920301915
World Bank. (2022). The World Bank annual report 2022: Helping countries adapt to a changing world. World Bank. https://documents1.worldbank.org/curated/en/099030009272214630/pdf/BOSIB0db37c9aa05a0961a08a83a0ea76ea.pdf
