The Effect of Monetary Policies on the Relationship between Advertising and Mutual Fund Flows

Abstract

This paper investigates the effect of monetary policies, mainly proxied by interest rate changes, on the relationship between advertising and subsequent net cash flows for Taiwan's mutual fund industry. Based on a comprehensive mutual fund dataset and allowing for a precise estimation of fund inflows and outflows, we find that there is a positive advertisingcash flow relation under different macroeconomic conditions. Taking into account a change in the interest rate, we document that the positive relationship between the two only exists when the interest rate is at a relatively low level regardless of restrictive and expansionary periods. Our empirical findings shed new light on marketing strategies whereby mutual fund advertising works well during relatively low interest rate environments, which are generally interpreted as exhibiting low cost of capital and a good signal of future economic conditions.

Monetary policies and Islamic mutual fund flows: evidence from Islamic republic of Iran

“…In other words, with the increase in the money growth rate, the tendency of investors to allocate resources to the Islamic mutual fund decreases. These results are consistent with McMillan (2022), Bubeck et al (2018); and Wu et al (2016).…”

“…Second, this study has used four criteria to measure monetary policies: money growth rate, liquidity growth rate, interest rate and inflation rate. However, in previous studies, this issue did not exist (Wu et al , 2016; Bubeck et al , 2018; Banegas et al , 2016). Finally, considering the economic sanctions in the research period, the Central Bank of Iran (CBI) has used appropriate monetary policies to control the pressure of sanctions and create a stable situation in the country’s economy.…”

“…The results show that mutual funds with higher returns can have higher mutual fund flows. Recent research has examined the effect of risk factor and macroeconomic variables on mutual fund flows (Clifford et al , 2013; Artavanis et al , 2019; Wu et al , 2016). The results show that total risk affects the inflows and outflows of the mutual funds.…”

“…Monetary policy news also sends signals about the future of the economy; thus, investors are expected to respond to this news in accordance with signaling theory. Previous empirical research on the impact of monetary policy on mutual fund flows suggests that monetary policies have a negative impact on mutual fund flows, and therefore, monetary policy has an impact on investor allocation (Wu et al , 2016; Bubeck et al , 2018; Banegas et al , 2016; Anaele and Umeora, 2019; Qureshi et al , 2019). Taking into account theories related to monetary policies and previous research, we try to examine the impact of the central bank’s monetary policies on Islamic mutual fund flows.…”

The effect of macroeconomics variables to Net Asset Value (NAV) growth of sharia mutual funds in Indonesia

“…Then there is a decrease towards the stability of positive responses in the 21 st month with a value of 0.014 percent continuing until the end of the period. The positive response given by the number of Sharia mutual fund NAVs to the money supply has the similar results research with (Wu et al, 2016) which results in a significant positive effect on the amount of sharia mutual fund NAV. This result occurs due to the community has a motive in holding money, one of which is to obtain profits, with the increase in the amount of money will encourage people to meet the needs of them including future needs through investment in Islamic mutual fund products.…”