Abstract
This study investigates whether the money supply (MS) is endogenously or exogenously determined in 10 developing Asian countries. The study implemented the Panel FMOLS, DOLS, and ARDL/PMG approaches with quarterly panel data from 1980Q1 to 2020Q4. The results reveal that bank lending and income positively influence the MS, while the inflation rate has a negative impact. These findings support the idea that the MS is endogenously determined while rejecting the view of the Monetarists that the MS is exogenously determined or that there is a “helicopter drop” of money. Central banks should espouse a flexible approach to monetary policy that considers the broader economic environment. Recognizing the endogeneity of the MS can lead to more prudent strategies for achieving sustainable economic outcomes.