Liquidity Preference Research Articles

Dynamic Liquidity Preferences of Mutual Funds

This paper examines the relation between expected market volatility and open-end mutual funds’ liquidity preferences. Using a large panel of actively managed U.S. equity mutual funds, I show that mutual fund managers hold more cash and tilt their holdings more heavily towards liquid stocks during periods when expected market volatility is high. Cross-sectional tests suggest that the dynamic preferences for liquidity are driven by concerns over investor withdrawals during volatile times. Furthermore, I find evidence that this type of dynamic behavior leads to higher fund returns.

The endogenous money hypothesis: empirical evidence from the CEMAC area (1990–2017)

The aim of this study is to assess the nature of money supply in the CEMAC area. Specifically, we aim at testing the post-Keynesian endogenous money hypothesis which asserts that money supply is demand-determined and not in the control of the central bank. Contrary to the usual Granger causality tests performed in most studies related to the post-Keynesian theory, we use in this paper a direct test of the endogeneity of money. Using quarterly data from 1990 to 2017, we provide empirical evidence on endogenous money supply in the CEMAC area. Moreover, the structuralist and liquidity preference views are the principal transmission channels of money supply endogeneity in this monetary union. Monetary authorities should consequently shift their policy from the apparent monetary targeting to interest rate targeting, and subsequently to inflation targeting. Moreover, the banking system must undergo profound structural changes.

It Is Not Possible to Fix the Misleading Analysis Contained in the History of Economic Thought Website of the Hicks -Hansen Version of the Is-Lm Model If One Is Seeking to Grasp Keynes’s Own, Actual Is-Lm Model Presented in Chapter 21 in Part IV on Part IV on pp.298-299 of the General Theory that uses M=L(r,Y),not M=L(r)

Keynes’s IS-LM model in the General Theory, defined in (r,Y) space and contained in chapter 21 in Part IV on pp. 298-299 of the General Theory, was derived from the underlying D-Z model of Chapter 20 that incorporated expectations and uncertainty into the P(expected economic profits-Z) and p(expected economic prices-D)terms. Keynes explicitly derived Y from his Aggregate Supply Curve (ASC) analysis, which presented a locus of all possible expected D-Z intersections. The derivation of the ASC occurs two times in the General Theory. The first derivation is contained in ft. 2 of pp. 55-56 of the General Theory. The second derivation occurs in chapter 20 on p.283 in fts. 1 and 2 of the General Theory. Keynes then integrates the liquidity preference function formally into the D-Z model of chapter 20 on pp. 304-306 of chapter 21. Y is not derived from the IS curve a la Hicks, but from the D-Z model that incorporated long run concerns about future expected profits and the uncertainty of such profit.. Keynes then combined r, the nominal rate of interest, with the actual value of a particular D value that is actually realized, which is Y, where Y is nominal, actual, effective aggregate demand. The Harrod-Hicks-Lange-Modigliani -Hansen versions of IS-LM had no foundation in expectations and uncertainty, as they were based on perfect competition and risk. Only Champernowne, using an equivalent exposition to Keynes’s as presented in chapters 20 and 21 of the General Theory, combined and integrated expectations and uncertainty variables into his RES paper model by defining Q and Q’ variables, which were contained only in the three diagram-three equation Keynes model, but not in the three diagram-three equation neoclassical model. Champernowne correctly showed that if the Q and Q’ variables are removed from Keynes’s model, then one obtains the classical (neoclassical) model. For example, in the labor market, if Q and Q’ are present in the functions, then the first order condition for optimality becomes the marginal product of labor equals the EXPECTED real wage. If, on the other hand, there is no uncertainty about the future, then the first order condition for optimality becomes the neoclassical marginal product of labor equals the ACTUAL real wage. Therefore, if there is no uncertainty about future prices and profits, then chapter 20 of the General Theory drops out of consideration, since chapter 20 is Keynes’s more advanced mathematical modelling that Champernowne’s model provides in graphical form, which was based on Keynes’s original 1933 model, where Keynes used W=the state of the news to designate the impact of uncertainty about future levels of prices and profits on employment levels. Champernowne’s Q and Q’ variables are equivalent to Keynes’s early W variable, which Keynes replaced with uncertainty in the General Theory, where uncertainty was defined by Keynes as an inverse function of the evidential weight of the argument, V, where V=V(a/h) =w, where w is the weight of the evidence, from chapters 6 and 26 of Keynes’s A Treatise on Probabilit. Thus, Keynes’s W represented the change in w over time. If w increases, so that W represents an increase in positive evidence, then nervousness and uncertainty decreases. If w decreases, so that W represents a decrease in positive evidence and increase in negative evidence, then nervousness and uncertainty increase. The only IS-LM model that is consistent with Keynes’s chapter 21 model is Champernowne’s. Meade, while dealing with expectations, did not explicitly introduce uncertainty as done by Champernowne with his Q and Q’ variables. Thus, involuntary unemployment for Keynes and monetary unemployment for Champernowne have nothing to do with rigid or fixed money wages, as claimed by Hicks, Harrod, Lange, and Modigliani, but are due to the presence of uncertainty. The Harrod, Hicks, Lange and Modigliani models are mis-specified because they do not incorporate any possibility for uncertainty to exist.

On the Post Keynesian (J. Robinson, GLS Shackle, R. Skidelsky) Attempt to Substitute J M Keynes’s 1937 QJE article, The General Theory of Employment for J M Keynes’s 1936 General Theory: Their Attempt was completely Destroyed in the Keynes-Townshend Exchanges of 1937-38

Joan Robinson, first with the aid of GLS Shackle, and then with the help of R. Skidelsky, attempted to convince academics, after Keynes had died in 1946, that Keynes had made major changes in his ideas on uncertainty and expectations in his 1937 QJE article that directly conflicted with what he had stated in the General Theory. The major change that was claimed to have occurred was that Keynes had supposedly changed his definition of uncertainty from being a range of possible different degrees of uncertainty, between the extremes of Complete Knowledge and Complete Uncertainty, to becoming a situation of “fundamental uncertainty” (fundamental uncertainty is also called radical uncertainty, irreducible uncertainty, deep uncertainty, genuine uncertainty, and real uncertainty by heterodox economists), which Skidelsky defines as “When a person cannot …compare the probabilities of two arguments, he may, using a terminology drawn from recent discussion, be said to be in a state of radical, or complete, uncertainty.” (Skidelsky, 1992, p.81). Skidelsky’s conclusion makes no sense because comparable probabilities must be exact, precise numerical probabilities a la Frank Ramsey. Of course, what Keynes had actually done, in Part II of the A Treatise on Probability, was to show how interval valued probability, using upper and lower bounds, could be used to deal with incomparable, non measurable, and incommensurable situations, where exact, precise, numerical probabilities could not be specified, by means of what Keynes called approximation and inexact measurement. Keynes NEVER, EVER discussed any such things as fundamental uncertainty anywhere in any publication in his lifetime. What he did discuss on pp.309-315 of chapter 26 of the A Treatise on Probability, was the case of IGNORANCE, which can only occur in the distant or far future (long run), and NOT in the near or immediate future (short run). His discussion in the A Treatise on Probability of ignorance is by far the most detailed and specific discussion of the impact of ignorance on decision making ever made by Keynes. Keynes’s discussions in chapter 12 of the General Theory or in the 1937 QJE article provide nothing new or novel and are, at best, small footnotes made to the discussions in the A Treatise on Probability. This, of course, is what Keynes told Townshend in late 1938 in response to Townshend’s five page letter that is contained on pp.289-293 of the CWJMK in Vol. 29 (1979). The goal of Robinson, as well as of Shackle and Skidelsky, was to eliminate any and all connections between the A Treatise on Probability and the General Theory, due to her severe mathematical ineptitude and innumeracy. This is why the exchange between Keynes and Townshend on pp.289-293 in Volume 29 of the CWJMK have been covered up by Robinson, Shackle, and Skidelsky, who cites only the last page of Keynes’s reply on page 294, but not page 293, where Keynes accepts Townshend’s assessment that there was a major and direct connection between Keynes’s liquidity preference theory of the rate of interest in the General Theory and Keynes’s nonnumerical probabilities and weight of the evidence from the General Theory, a connection that Skidelsky had desperately tried to undermine and destroy in his Shacklesque attack on the A Treatise on Probability on pp.60-100 of his 1992 second volume of his biography on Keynes.

J. M. Keynes Made It Clear in His Correspondence to J. Robinson between September 8th to November 9th, 1936 that She Was Completely Ignorant of His Liquidity Preference Theory of the Rate of Interest: It Is Simply Impossible that Joan Robinson Was “…One of J.m. Keynes’ Most Brilliant Students, Who Helped Him Draft the Original of His General Theory.”

J. M. Keynes Made It Clear in His Correspondence to J. Robinson between September 8th to November 9th, 1936 that She Was Completely Ignorant of His Liquidity Preference Theory of the Rate of Interest: It Is Simply Impossible that Joan Robinson Was “…One of J.m. Keynes’ Most Brilliant Students, Who Helped Him Draft the Original of His General Theory.”

MONETARY REGULATION IN THE ECONOMIC GROWTH OF A STATE

Abstract. In the article it is provided a comparative analysis of monetary regulation models and explores their impact on economic growth. The aim of the paper is to study models of monetary regulation and their impact on economic growth. It has been established that monetary regulation of any country in the world should be aimed at ensuring economic growth. The authors of the article proved that monetary regulation should be considered as a source of economic shifts, an increase in real wages and living standards accordingly; it acts as a measure of inflationary processes’ containment, which, in turn, meets strategic objectives of monetary policy. The study showed that the rapid development of monetary policy and economic growth theories is marked by certain contradictions, uncertainty and cross flows. The evolution of theories is represented by the Keynesian Liquidity Preference Theory, Monetarism, Neoclassical Real business-cycle theory, the Neo-Keynesian model, and the New Consensus Model. Each of the models has its own characteristics, based on the objects of monetary regulation (money supply, inflation, interest rates, exchange rate). Based on the analysis of the views of researchers on the impact of monetary regulation on economic growth, the authors concluded that concepts are divided according to those that characterize weak relations between these phenomena, and those that prove close correlation. It is concluded that the influence of monetary regulation on economic growth takes place when choosing the regulatory model itself and instruments for its implementation. It is proved that the model of monetary regulation should be based on developed monetary rules. The authors of the article proved that in Ukraine, in conditions of using a monetary design based on the inflation targeting regime and taking into account the importance of increasing the efficiency of using main instruments of monetary regulation, it is necessary, first of all, to ensure the consistency of monetary and fiscal policies. The coordination of monetary and fiscal policies should consist in developing and implementing them in such a way that they do not contradict each other and together contribute to the achievement of the common goals of economic policy, such as sustainable economic growth and low unemployment in terms of long-term price and external stabilities. It is concluded that the insufficient efficiency of the monetary transmission mechanism is reflected in the imbalance of money and foreign exchange markets, the deformation of the credit market and the credit climate degradation, and the decrease in the influence of monetary impulses of the central bank on both the financial system and the real sector of the economy. That is, the main problem of the significant influence of monetary regulation on economic growth in the country lies in restoring the effectiveness of the channels of the transmission mechanism of monetary policy, which depends on the choice of monetary design. Keywords: monetary design, economic growth, monetary instruments, monetary regulation, monetary rules. JEL Classification E50, 58; O49 Formulas: 0; fig.: 7; tabl.: 0; bibl.: 23.

Instruments for investment protection when structuring Islamic venture capital

Purpose This paper aims to explore how Sharīʿah-compliant instruments can be used to protect investments and attract investors to Islamic venture capital (IVC). Equity investments in Islamic finance are trailing behind their potential value. This is partly due to the limited instruments available to protect investors, as most of the tools used in conventional venture capital (VC) are deemed Sharīʿah non-compliant. Design/methodology/approach The research amends and uses Wright Robbie’s (1998) VC structure and how it can be used to finance small and medium-sized enterprises (SMEs). The study uses secondary data reported in the literature and the expertise of the Sharīʿah scholarship. Findings There are Sharīʿah-compliant instruments available for IVC that can be used to protect investments and incentivize potential investors to promote investments in SMEs. At the various stages of the IVC process, preference shares, perpetual mudharabah, diminishing musharakah, musharakah with murabahah, musharakah with qard, negligence clauses, liquidation preference, warrants and supermajority clauses can all be used with appropriate conditions to protect investors and offer incentives for them to invest in IVC. Practical implications The research provides a method for screening and evaluating potential deals for SMEs using an amended VC called an IVC scheme with a focus on Sharīʿah-compliant investment protection instruments. The method can promote SMEs and entrepreneurship and financial inclusion for Sharīʿah-compliant investors. Originality/value This study contributes new ideas to how IVC can be structured, taking into consideration Sharīʿah constraints. The paper addresses investors’ protection and incentives to attract Sharīʿah-compliant investors, which have been lacking in the literature.

‘The Provocative Joan Robinson’ Was Completely Ignorant of Keynes ’S Chapter 21 Is-Lm Model on Pp. 298–299 of the General Theory Even Though She Supposedly Read the Final 1935 Draft of the General Theory: The Exchanges of September to November, 1936 Between Keynes and Robinson Show Her Complete Ignorance

‘The Provocative Joan Robinson’ Was Completely Ignorant of Keynes ’S Chapter 21 Is-Lm Model on Pp. 298–299 of the General Theory Even Though She Supposedly Read the Final 1935 Draft of the General Theory: The Exchanges of September to November, 1936 Between Keynes and Robinson Show Her Complete Ignorance

Evolution of nanoliter size fluid droplet on micropatterned surface

Static shape of liquid droplets on textured surface draws significant attention from the standpoint of several engineering applications, ranging from heat transfer to bio-printing. This paper discusses the equilibrium behavior of a nanoliter size droplet dispensed on a micropatterned surface. For a given combination of intrinsic wettability of the surface, liquid surface tension and the geometric morphology of the textured surface, the liquid droplet prefers to be on Cassie-Baxter, Wenzel or an intermediate, hybrid state. Here we have carried out an energy-based simulation of nanoliter size droplets on micropatterned surface, using an open-source surface evolver fluid interface tool SE-FIT. A simplified periodic geometry of rectangular (straight or tapered) micro-pillars of specified dimensions is chosen for the micropatterned surface. For a given solid surface texture, we found that droplet prefers to transit from Wenzel to Cassie state beyond a threshold intrinsic sessile contact angle (which the liquid would have subtended on a microscopically smooth surface of the same solid material). This critical transition contact angle is plotted against the roughness parameter. Present study helps in designing the wettability-engineered surfaces for specific engineering applications.

Investor Behavior: Does Tax Avoidance and Liquidity Preference Culture Drive Equity Prices in Pakistan

The present study investigates market-wide herding of stock market, industry indices of Pakistan, China and USA, A-cross border herding of Pakistan stock market with Chinese stock market and USA stock market. With Cross-Sectional-Absolute-Deviation, to check whether geographical distance matters to influence the stock markets or not and USA is its major influential, cannot be ignored. Market-wide herding in Pakistan is found only during 2004 and 2008 and A-cross border herding for Pakistan is only found from the USA which support asset pricing model and market efficiency. Pakistan market do not herd around China, this negates geographical distance matters, and influence in determining investor behaviour in stock markets. It is revealed, Pakistan stock market does not observe as much herding behaviour in stock investment as other markets (USA and China), so it can be said that Pakistan stock exchange index which is representative of Pakistan Stock market is efficiently operating in contest of Herding.

Liquidity from Two Lending Facilities

During financial crises, the lender of last resort (LOLR) uses lending facilities to inject critical funding into the banking sector. The facilities need to be designed in such a way that banks are not reluctant to seek assistance due to stigma and that banks with liquidity concerns are attracted rather than those prone to risk-taking and moral hazard incentives. We use an unexpected disclosure that introduced stigma at one of two similar LOLRs during the Great Depression to evaluate whether banks used LOLR assistance to improve their liquidity needs using a novel trivariate model with recursive endogeneity. We find evidence that banks that approached the facility with stigma were less liquid and reduced their position of safe assets in comparison with banks that approached the facility with no stigma. Thus, stigma forced the pool of LOLR borrowers to separate into different groups of banks that ex-post revealed their liquidity preferences. This finding sheds light on why and when banks approach their LOLR.

UK REIT conversion and institutional ownership dynamic

PurposeThe purpose of this paper is to examine the impact of conversion to REIT status by former listed property companies in the United Kingdom on the level of institutional ownership during the period of 2007–2016.Design/methodology/approachThis paper uses an event study framework to track the change in institutional ownership three years before and after a REIT conversion event. This event study approach circumvents the sample selection bias issue associated with the conversion event wherein the decision to convert to REIT is likely to be endogenous.FindingsPanel regression analysis reveals that changing to REIT status led to a 12.8 and 15.2% increase in institutional ownership and number of institutional investors, respectively. The first order of priority in institutional investors' investment in REIT shares is their preference for liquidity. Further analysis shows that institutional investors changed their preferences towards characteristics associated with systematic risk, firm age and liquidity after the conversion event by becoming less averse to firm-specific risk, placing more emphasis on firm age and less emphasis on systematic risk and liquidity.Practical implicationsOverall, conversion to REIT status helps increase former property companies' investor base, which is in line with the regulator's aim to open up the property market to a wide range of investors through the introduction of a REIT regime. Findings from this paper also have policy implications for countries that are considering a REIT regime for their capital market and existing REIT regimes without a formal conversion mechanism.Originality/valueThis paper offers, for the first time, evidence on 1) how conversion to REITs influences firms' institutional ownership and 2) the determinants of converted REITs' institutional ownership.

What’s wrong with Pittsburgh? Delegated investors and liquidity concentration

What makes an asset institutional quality? This paper proposes that one reason is the existing concentration of delegated investors in a market through a liquidity channel. Consistent with this intuition, it documents differences in investor composition across US cities and shows that delegated investors concentrate their investments in cities with higher turnover. It then estimates a search model showing how heterogeneity in liquidity preferences makes some markets more liquid, even when assets have identical cash flows. The paper provides evidence for clientele equilibria arising in frictional asset markets and suggests that a liquidity channel may explain divergent paths in city development.

Bank Specific Factors and Bank Performance: Evidence from Nigeria

The impact of bank-specific factors on the performance of the deposit money banks in a country has been an area of inquiry for any bank-based financial system. The research investigates the impacts of bank-specific factors on bank performance in Nigeria within 2014-2018. This research use panel data from ten banks that had the best deposit in 2018. The panel data approach found a significant negative relationship between asset quality and return on asset and a significant positive relationship between loan-to-deposit ratio, capital adequacy, and return on asset. In this regard, strategic management should ensure chasing their functional intermediation role and ensure liquidity preference to meet its day-to-day obligations.JEL Classification: G21, G32, C33 How to Cite:Ariyibi, E. M., Yunusa, L. A., & Williams, T. O. (2020). Bank Specific Factors and Bank Performance: Evidence from Nigeria. Signifikan: Jurnal Ilmu Ekonomi, 9(2), 167-176. https://doi.org/10.15408/sjie.v9i2.14658.

The 'Embodied Equity' Theory of Term Structure

This study analytically specifies the residual cash flow stream that real capital embodies. The specification separates debt cash flows from equity and obtains an equilibrium condition equating marginal physical product and real user cost of capital. Analysis of the user cost specification reveals that the equilibrium interest rate is an increasing function of the debt contract's loan-to-value ratio and average period of debt. The basic reason why the interest rate increases with average period is this: the equity financing rate exceeds the interest rate, a lengthening debt average period reduces to equity the discounted cost of debt, the financing rate increases to re-establish equilibrium. The “embodied equity” hypothesis advanced herein joins the expectations hypothesis, the liquidity preference hypothesis, and the market segmentation hypothesis as a fundamental explanation for the upward slope on the yield curve.

Comparing the Deliberate Omissions of R. Harrod in His 1951 Biography of J M Keynes With the Deliberate Omissions of R.Skidelsky in the Second Volume of His 1992 Biography of J M Keynes: The Source of All Heterodox Claims About ’Many Gaping Holes‘, Gaps', and ‘Deeply Serious Flaws’ in Keynes’s General Theory Can All Be Traced to Joan Robinson

In the first volume of his biography of Keynes(1983),R. Skidelsky showed that R.Harrod,in 1951 in his biography on Keynes, had deliberately omitted relevant evidence about the life of J M Keynes,such as his gay sexual life up until 1921 and his conscientious objector status during WW I.Skidelsky(1983,pp.xv-xxviii) showed how Harrod had sought to give a misleading account of Keynes’s life by the deliberate omission of materials and selective quotations taken from Keynes’s letters of correspondence (1983,p.xxiii) that Harrod believed would bias readers against Keynes’s 1936 General Theory. Unfortunately, R.Skidelsky has done exactly the same thing in the second volume of his three volume biography of Keynes as Harrod had done in 1951.Skidelsky has deliberately omitted relevant evidence regarding the roles played by Joan Robinson and Richard Kahn during the years Keynes was writing the General Theory and defending it against the mainstream neoclassical school of economics in the years from 1930 to 1937. Skidelsky accepted Joan Robinson’s claims that (a) there were all kinds of gaping holes, gaps, and serious flaws in Keynes’s General Theory and that (b) Richard Kahn invented, developed and explained the multiplier concept to Keynes. This allowed Keynes to write the General Theory. Therefore, without Kahn’s personal instruction of Keynes , whereby Kahn was able to help Keynes with mathematical analysis which Keynes supposedly did not really understand, there would have been no General Theory written by Keynes. Skidelsky deliberately omitted the September through November,1936, correspondence contained in Volume 14 of the Collected Writings of John Maynard Keynes on pp.134-148 between Keynes and Robinson that showed a reader that Joan Robinson not only had no idea about what Keynes’s liquidity preference theory of the rate of interest involved ,but that the comments in her proposed book on liquidity preference, published in 1937, were nothing more than “nonsense. All of her comments on liquidity preference were withdrawn before her book was published. Skidelsky deliberately omitted the 1936 exchanges between Hans Niesser and Richard Kahn over the theory of the multiplier because it contains an incredible, startling admission on Kahn’s part,which was that Kahn’s ideas about the multiplier came directly from Keynes. Kahn had never explained the multiplier concept to Keynes and Keynes’s mathematics was not rusty. Keynes had developed and applied the multiplier some 10 and 2 years, respectively, before Kahn’s June, 1931 paper was published in the Economic Journal. Skidelsky deliberately omitted any mention of F. Y. Edgeworth’s two reviews of Keynes’s A Treatise on Probability because Edgeworth’s two reviews directly challenge and contradict the claims made by Frank Ramsey in his 1922 and 1926 reviews .Edgeworth clearly identifies Keynes’s theory of probability as an interval valued theory that is not mysterious at all, identifies the importance of Keynes’s finite probabilities in Part III of the A Treatise on Probability on analogy ,identifies the possible importance of Keynes’s conventional coefficient of weight and risk, c , in Part IV, and acknowledges Keynes’s development of a method, based on Chebyshev’s Inequality, of establishing a lower bound on risk for decision makers in Part V. Any reader, who is familiar with Edgeworth’s two reviews of Keynes’s A Treatise on Probability,which contain no mention of any of Ramsey’s claims, would have grave and serious doubts about Skidelsky’s claim that the boy genius had demolished Keynes’s theory in a 1 hour presentation made in 1925. Skidelsky’s deliberate omission of this relevant evidence is due to his attempt to support Joan Robinson’s claims about gap and holes in Keynes’s General Theory that needed to be filled so as to complete the Keynesian revolution,where Joan Robinson’s claims would represent the “true” legacy of the so called ”unfinished “ Keynesian Revolution.How a mathematically illiterate like Joan Robinson was able to detect gaping holes is unclear.What is very clear is Robinson’s complete and total failure to grasp the D-Z model of chapter 20, which underlies the IS-LM model of chapter 21, as well as Keynes’s multiple equilibria as specified by Keynes’s Aggregate Supply Curve.

A Keynes + Schumpeter Model to Explain the Relationship Between Money, Development and Crises

ABSTRACT Over the years, many economists have underlined the opportunity to integrate the lessons of Keynes and Schumpeter. Recently, Dosi and his co-authors have developed a ‘Keynes + Schumpeter’ model that describes a ‘complex evolving system’. This work presents a different version of a K + S model that highlights the role of bank money in the introduction of innovations, an essential part of Schumpeter’s analysis neglected by Dosi and his co-authors. The aim of this work is to integrate the visions of Keynes and Schumpeter in a way allowing: (i) to elaborate a monetary theory of production that highlights the relationship between money, development and crises; (ii) to show that the explanation of the relationship between money and crises derived from our K + S model is sounder than the explanations developed by Keynes in The General Theory, which is based on the liquidity preference theory, and by Schumpeter in Business Cycles, which, instead, is based on the concept of creative destruction.

Liquidity preference in a world of endogenous money: A short-note.

We argue that even in the case that banks are able to maintain the interest rate at a level that they want (the most “radical” version of the theory of endogenous money), liquidity preference continues to constitute a key element when determining the real equilibrium of the economy. In a framework of endogenous money, the Keynesian theory of liquidity preference still constitutes a theory that determines level of income. Financial markets matter, and the Kaldorian idea that liquidity preference “ceases to be of any importance” can only be defended under a set of very restrictive assumptions.

Demanda de dinero en América Latina, 1996-2016: una aplicación de cointegración en datos de panel

The study of money demand enables us to understand the macroeconomic effects of monetary policy. In this paper, we estimate the money demand for 15 Latin American countries from 1996 to 2016, using panel cointegration and FMOLS estimation methods. We also estimate a model of dynamic common factors to test for the existence of common trends between countries. The results show a long run relationship between money demand, income, and interest rates. However, there is no evidence of common factors between countries, which is consistent with the heterogeneity observed in the estimated elasticities. Contrary to what we expected, in several cases, the estimated income elasticity is greater than one, which could be associated with agents’ higher risk perceptions which affect their liquidity preferences.

Firm Specific Factors and Financial Performance of Real Estate Firms Listed at the Nairobi Securities Exchange In Kenya

This study sought to find the effect of selected firm specific factors on real estate firm financial performance. Financial performance was measured by return on assets (ROA) and return on equity (ROE). The objectives of the study were to; determine the effect of liquidity on financial performance; assess the effect of leverage on financial performance; and examine the effect of firm size on financial. The study was based on the Trade-off theory, Shiftable theory and Liquidity preference theory. The study used descriptive survey research design in an attempt to investigate the effect of selected firm specific factors on firm financial performance. The population of this study comprised the five (5) real estate firms listed under the investment subsector of the Nairobi Securities Exchange (NSE). The study used data covering a period of ten years from 2008 to 2017. The data was collected from published audited financial annual reports of the four (4) real estate firms listed in the Nairobi Securities Exchange. One was not studied due to unavailability of financial statements for the whole period of the study. The secondary data was collected using a data collection sheet. To describe profiles of the firms and research variables, means, standard deviations and coefficient of variation were used; and Pearson’s correlation was used to examine relationships. The diagnostic tests done were normality and autocorrelation tests. The researcher used SPSS software to assist in analyzing the data. The results revealed significant negative relationship between liquidity and financial performance. The results also showed insignificant positive relationship between leverage and financial performance. The results also showed insignificant positive relationship between firm size and financial performance. Further, the results evidenced that all the variables combined had a statistically significant effect on the financial performance. The study recommends further research on other firm specific factors not included in the study to determine whether they have a significant effect on financial performance of real estate in Kenya or not. Keywords: Firm Specific Factors, Financial Performance, Real Estate Firms, NSE DOI: 10.7176/RJFA/11-14-18 Publication date: July 31 st 2020