A review on afghanistan money market, money management and money transmission mechanism

In this study, the money market, money management and money transmission mechanism in Afghanistan have been evaluated. The main purpose of this study is to examine monetary management and transmission mechanism of implemented monetary policies in Afghanistan in 2006-2015 period. In order to achieve this purpose, firstly the relationship between central banking, money management and economy in general, Secondly the relationship between money management, money market and economy in Afghanistan has been discussed. Likely, in the last section of this study, the long-term relations between money supply, interest rates, exchange rate, credit volume, national income and inflation have been analyzed. ARDL boundary test was used to determine the long-term equilibrium relationship between the variables. In conclusion a long-term equilibrium relationship between variables was determined. Among the explanatory variables, exchange rate, credit volume and RGDP is significant and positive, but there is no statistically significant relationship between interest and inflation and money supply. Thus, based on the results of the study, monetary policy should be planned based on maintainance of exchange rate stability and economic performance in import-dependent Afghanistan by controlling money supply in the economy.