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Credit expansion and financial stability in Malaysia

This study investigated the degree of synchronization between credit expansion and financial stability in Malaysia at aggregated and disaggregated levels. The dynamic factor model and a broad range of macro-financial variables are adopted to construct a financial stability index to measure the stabi...

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Main Authors: Koong, Seow Shin, Law, Siong Hook, H. Ibrahim, Mansor
Format: Article
Language:English
Published: Elsevier 2017
Online Access:http://psasir.upm.edu.my/id/eprint/61246/1/Credit%20expansion%20and%20financial%20stability%20in%20Malaysia.pdf
http://psasir.upm.edu.my/id/eprint/61246/
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spelling my.upm.eprints.612462018-09-07T03:27:14Z http://psasir.upm.edu.my/id/eprint/61246/ Credit expansion and financial stability in Malaysia Koong, Seow Shin Law, Siong Hook H. Ibrahim, Mansor This study investigated the degree of synchronization between credit expansion and financial stability in Malaysia at aggregated and disaggregated levels. The dynamic factor model and a broad range of macro-financial variables are adopted to construct a financial stability index to measure the stability of the Malaysian financial system. The non-parametric method is subsequently employed to gauge the degree of synchronization between credit and financial stability. The empirical findings indicated a negative synchronization between business credit and financial stability in Malaysia, suggesting that an expansion in business credit would lead to financial instability. The results implied that difficulties will arise in designing policies as business credit expands. On the other hand, there is insufficient evidence to show that increasing household credit has any negative influence on Malaysian financial stability. Elsevier 2017-02 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/61246/1/Credit%20expansion%20and%20financial%20stability%20in%20Malaysia.pdf Koong, Seow Shin and Law, Siong Hook and H. Ibrahim, Mansor (2017) Credit expansion and financial stability in Malaysia. Economic Modelling, 61. 339 - 350. ISSN 0264-9993; ESSN: 1873-6122 10.1016/j.econmod.2016.10.013
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description This study investigated the degree of synchronization between credit expansion and financial stability in Malaysia at aggregated and disaggregated levels. The dynamic factor model and a broad range of macro-financial variables are adopted to construct a financial stability index to measure the stability of the Malaysian financial system. The non-parametric method is subsequently employed to gauge the degree of synchronization between credit and financial stability. The empirical findings indicated a negative synchronization between business credit and financial stability in Malaysia, suggesting that an expansion in business credit would lead to financial instability. The results implied that difficulties will arise in designing policies as business credit expands. On the other hand, there is insufficient evidence to show that increasing household credit has any negative influence on Malaysian financial stability.
format Article
author Koong, Seow Shin
Law, Siong Hook
H. Ibrahim, Mansor
spellingShingle Koong, Seow Shin
Law, Siong Hook
H. Ibrahim, Mansor
Credit expansion and financial stability in Malaysia
author_facet Koong, Seow Shin
Law, Siong Hook
H. Ibrahim, Mansor
author_sort Koong, Seow Shin
title Credit expansion and financial stability in Malaysia
title_short Credit expansion and financial stability in Malaysia
title_full Credit expansion and financial stability in Malaysia
title_fullStr Credit expansion and financial stability in Malaysia
title_full_unstemmed Credit expansion and financial stability in Malaysia
title_sort credit expansion and financial stability in malaysia
publisher Elsevier
publishDate 2017
url http://psasir.upm.edu.my/id/eprint/61246/1/Credit%20expansion%20and%20financial%20stability%20in%20Malaysia.pdf
http://psasir.upm.edu.my/id/eprint/61246/
_version_ 1643837534567923712
score 13.211869

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