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Determinants of external debt in Malaysia / Zahiratul Nazura Abdul Kadir

It is difficult for a developing country to support itself with only domestic financial resources because these resources are limited. So, they tend to borrow from external resources to help them in enhancing their economies. However, borrowing from other foreign countries can be one of the main pro...

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Main Author: Abdul Kadir, Zahiratul Nazura
Format: Student Project
Language:English
Published: Faculty of Business Management 2017
Subjects:
Credit. Debt. Loans
Online Access:http://ir.uitm.edu.my/id/eprint/24565/1/PPb_ZAHIRATUL%20NAZURA%20ABDUL%20KADIR%20J%20BM17_5.pdf
http://ir.uitm.edu.my/id/eprint/24565/
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spelling my.uitm.ir.245652019-08-28T08:37:38Z http://ir.uitm.edu.my/id/eprint/24565/ Determinants of external debt in Malaysia / Zahiratul Nazura Abdul Kadir Abdul Kadir, Zahiratul Nazura Credit. Debt. Loans It is difficult for a developing country to support itself with only domestic financial resources because these resources are limited. So, they tend to borrow from external resources to help them in enhancing their economies. However, borrowing from other foreign countries can be one of the main problems faced by developing countries. A major obstacle to the continued capital acquisition and future economic growth, the debt burden is now one of the main concerns in international affairs. Many lesser-developed countries (LDCs) such as Myanmar and Bangladesh, today simply cannot repay these debts, without the assistance of developed countries (DCs). It is said that extra and excess portion of external borrowings more than the favorable level will contribute negatively to the country's economy instead of the collected amount of international debt helps in developing their economic growth up to an ideal level. The purpose of this paper is to examine the determinants of using external debt for Malaysia. Malaysia is chosen because this country is one of the less-developed countries that use external debt to enhance their economies. This paper wants to investigate the factor that most enhancing the external borrowings in Malaysia and why it encourages the external debt to increase. This study use annual time series data for the period 1987-2016 on debt composition and run regressions of Gross Domestic Product (GDP), inflation, trade openness, interest rate and savings gap. This paper find that the GDP, inflation, interest rate and savings gap are consistently significant determinants composition of external debt. While trade openness has negative relationship with external debt but not significant at required level of significance. Consistent with my prediction, GDP and inflation are found to have a significant positive impact on external debt. From the results obtained, it is also suggested that increase in interest rate and savings gap can promote external debt. On the other hand, GDP and inflation appear to discourage external debt. Faculty of Business Management 2017 Student Project NonPeerReviewed text en http://ir.uitm.edu.my/id/eprint/24565/1/PPb_ZAHIRATUL%20NAZURA%20ABDUL%20KADIR%20J%20BM17_5.pdf Abdul Kadir, Zahiratul Nazura (2017) Determinants of external debt in Malaysia / Zahiratul Nazura Abdul Kadir. [Student Project] (Unpublished)
institution Universiti Teknologi Mara
building Tun Abdul Razak Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Teknologi Mara
content_source UiTM Institutional Repository
url_provider http://ir.uitm.edu.my/
language English
topic Credit. Debt. Loans
spellingShingle Credit. Debt. Loans
Abdul Kadir, Zahiratul Nazura
Determinants of external debt in Malaysia / Zahiratul Nazura Abdul Kadir
description It is difficult for a developing country to support itself with only domestic financial resources because these resources are limited. So, they tend to borrow from external resources to help them in enhancing their economies. However, borrowing from other foreign countries can be one of the main problems faced by developing countries. A major obstacle to the continued capital acquisition and future economic growth, the debt burden is now one of the main concerns in international affairs. Many lesser-developed countries (LDCs) such as Myanmar and Bangladesh, today simply cannot repay these debts, without the assistance of developed countries (DCs). It is said that extra and excess portion of external borrowings more than the favorable level will contribute negatively to the country's economy instead of the collected amount of international debt helps in developing their economic growth up to an ideal level. The purpose of this paper is to examine the determinants of using external debt for Malaysia. Malaysia is chosen because this country is one of the less-developed countries that use external debt to enhance their economies. This paper wants to investigate the factor that most enhancing the external borrowings in Malaysia and why it encourages the external debt to increase. This study use annual time series data for the period 1987-2016 on debt composition and run regressions of Gross Domestic Product (GDP), inflation, trade openness, interest rate and savings gap. This paper find that the GDP, inflation, interest rate and savings gap are consistently significant determinants composition of external debt. While trade openness has negative relationship with external debt but not significant at required level of significance. Consistent with my prediction, GDP and inflation are found to have a significant positive impact on external debt. From the results obtained, it is also suggested that increase in interest rate and savings gap can promote external debt. On the other hand, GDP and inflation appear to discourage external debt.
format Student Project
author Abdul Kadir, Zahiratul Nazura
author_facet Abdul Kadir, Zahiratul Nazura
author_sort Abdul Kadir, Zahiratul Nazura
title Determinants of external debt in Malaysia / Zahiratul Nazura Abdul Kadir
title_short Determinants of external debt in Malaysia / Zahiratul Nazura Abdul Kadir
title_full Determinants of external debt in Malaysia / Zahiratul Nazura Abdul Kadir
title_fullStr Determinants of external debt in Malaysia / Zahiratul Nazura Abdul Kadir
title_full_unstemmed Determinants of external debt in Malaysia / Zahiratul Nazura Abdul Kadir
title_sort determinants of external debt in malaysia / zahiratul nazura abdul kadir
publisher Faculty of Business Management
publishDate 2017
url http://ir.uitm.edu.my/id/eprint/24565/1/PPb_ZAHIRATUL%20NAZURA%20ABDUL%20KADIR%20J%20BM17_5.pdf
http://ir.uitm.edu.my/id/eprint/24565/
_version_ 1685649876500611072
score 13.211869

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