The Impact of Money Supply on Stock Returns: Evidence from Tehran Stock Exchange

Document Type : Original Article


Faculty member, Department of Business Administration, Sari Branch, Islamic Azad University, Sari, Iran


Monetary policies refer to the set of measures and decisions that are taken through the central bank to control the supply of money and credit, so that changes in the supply of money affect the flow of society's expenses. As observed in recent years, the successful performance of the stock market can have a significant effect on the economic growth of countries, and on the other hand, the increase in the amount of money affects economic activities. This research examines the effect of the money supply volume on the stock returns of 247 listed companies on the Tehran Stock Exchange (TSE). In the present research, the relationships between the two variables are examined on a monthly basis during 2002-2007. Probit models in Stata software wete used to investigate the relationship between the stock returns and the money supply volume. The results do not show a significant relationship between the money volume and stock returns.