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Credit card usage and inflation: a case study of a small open economy

This study examined the influence of credit card usage on inflation in a small open economy, Malaysia. The existing studies used money supply, and bank lending as the key monetary determinants of inflation in Malaysia. These two variables had also been re-examined separately for comparison purpose...

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Main Authors: Wong, Zoey Jia Rou, Tang, Tuck Cheong
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2020
Online Access:http://journalarticle.ukm.my/15587/1/jeko_54%281%29-2.pdf
http://journalarticle.ukm.my/15587/
https://www.ukm.my/fep/jem/content/2020.html
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spelling my-ukm.journal.155872020-11-06T12:32:12Z http://journalarticle.ukm.my/15587/ Credit card usage and inflation: a case study of a small open economy Wong, Zoey Jia Rou Tang, Tuck Cheong This study examined the influence of credit card usage on inflation in a small open economy, Malaysia. The existing studies used money supply, and bank lending as the key monetary determinants of inflation in Malaysia. These two variables had also been re-examined separately for comparison purpose. Other macroeconomic variables were economic activity and imports. The paper employs The Autoregressive Distributed Lag (ARDL) approach using time series data with monthly observations over 1997-2017. The results of this study showed that the price level, the imports and economic activity were cointegrated. In the long-run, credit card usage was more elastic than bank lending. The economic activity remained the most elastic determinant of price level. In the short-run, bank credit growth, and money supply growth determine the inflation. Meanwhile, imports growth and economic growth did not influence the inflation. The past inflation rates were found to be informative to the current inflation. Hence, this study suggested that inflation in Malaysia was due to ‘too much financing’. This study also provided policy implications Penerbit Universiti Kebangsaan Malaysia 2020 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/15587/1/jeko_54%281%29-2.pdf Wong, Zoey Jia Rou and Tang, Tuck Cheong (2020) Credit card usage and inflation: a case study of a small open economy. Jurnal Ekonomi Malaysia, 54 (1). pp. 19-32. ISSN 0127-1962 https://www.ukm.my/fep/jem/content/2020.html
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description This study examined the influence of credit card usage on inflation in a small open economy, Malaysia. The existing studies used money supply, and bank lending as the key monetary determinants of inflation in Malaysia. These two variables had also been re-examined separately for comparison purpose. Other macroeconomic variables were economic activity and imports. The paper employs The Autoregressive Distributed Lag (ARDL) approach using time series data with monthly observations over 1997-2017. The results of this study showed that the price level, the imports and economic activity were cointegrated. In the long-run, credit card usage was more elastic than bank lending. The economic activity remained the most elastic determinant of price level. In the short-run, bank credit growth, and money supply growth determine the inflation. Meanwhile, imports growth and economic growth did not influence the inflation. The past inflation rates were found to be informative to the current inflation. Hence, this study suggested that inflation in Malaysia was due to ‘too much financing’. This study also provided policy implications
format Article
author Wong, Zoey Jia Rou
Tang, Tuck Cheong
spellingShingle Wong, Zoey Jia Rou
Tang, Tuck Cheong
Credit card usage and inflation: a case study of a small open economy
author_facet Wong, Zoey Jia Rou
Tang, Tuck Cheong
author_sort Wong, Zoey Jia Rou
title Credit card usage and inflation: a case study of a small open economy
title_short Credit card usage and inflation: a case study of a small open economy
title_full Credit card usage and inflation: a case study of a small open economy
title_fullStr Credit card usage and inflation: a case study of a small open economy
title_full_unstemmed Credit card usage and inflation: a case study of a small open economy
title_sort credit card usage and inflation: a case study of a small open economy
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2020
url http://journalarticle.ukm.my/15587/1/jeko_54%281%29-2.pdf
http://journalarticle.ukm.my/15587/
https://www.ukm.my/fep/jem/content/2020.html
_version_ 1683231764542128128
score 13.211869

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