Section Article

Stability of Indias money demand function and the impact of financial innovation
Author(s): Kiran Bisht

Abstract
This research examines the durability of the money demand function in India in the face of constant financial innovation. We conduct an analysis on the correlation between money demand and many factors that influence it such as income levels interest rates and financial innovations like digital payments and new financial instruments. This analysis is based on a large dataset that covers several decades. Our research shows that while conventional factors still have a substantial impact the fast rate of financial innovation has caused noticeable changes in the function that determines the demand for money. We use sophisticated econometric methods to evaluate the consistency of the money demand function across different periods and determine the main elements that contribute to its fluctuation. The findings indicate that while the general demand for money stays reasonably consistent the influence of financial innovation on this connection requires a detailed comprehension of the consequences for monetary policy. This research offers vital information for policymakers and financial organisations aiming to manage the changing terrain of money demand and preserve economic stability.