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Impact of domestic public debt on financial development and economic growth in Malaysia

Government interventions through fiscal policy are important to promote growth. In a nutshell, economic growth cannot be developed without government spending. Unfortunately, government tends to borrow from internal and external sources to finance budget deficit when additional government spending...

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Main Author: Mok, Wei Mun
Format: Thesis
Language:English
Published: 2014
Online Access:http://psasir.upm.edu.my/id/eprint/66507/1/FEP%202015%2026%20IR.pdf
http://psasir.upm.edu.my/id/eprint/66507/
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spelling my.upm.eprints.665072019-01-24T07:10:59Z http://psasir.upm.edu.my/id/eprint/66507/ Impact of domestic public debt on financial development and economic growth in Malaysia Mok, Wei Mun Government interventions through fiscal policy are important to promote growth. In a nutshell, economic growth cannot be developed without government spending. Unfortunately, government tends to borrow from internal and external sources to finance budget deficit when additional government spending is unable to meet the tax revenue. Nowadays, the issue of higher public debt in Malaysia has received an attention from policy makers and economists. Given the abundance of liquidity and ample financial funds in the banking system, Malaysian government can continue borrow and mainly rely on domestic source to close the budgetary gap. Hence, the purpose of this study is to investigate the impact of domestic public debt on financial development and economic growth in Malaysia. The sample period in this study covers the annual time series data from 1980 to 2010. By using Autoregressive Distributed Lag (ARDL) cointegration bound test, this study estimates long run and short run relationship among domestic pblic debt, financial development and economic growth in Malaysia. The empirical finding suggests that outstanding of domestic public debt does crowd out private investment and have a statistically negative impact on financial development during the occurrence of financial crisis. Meanwhile, the ARDL long run coefficient reveals that domestic public debt has an adverse impact on the level of economic growth during the estimate period. In conclusion, government needs to concern over the debt level in order to reduce the debt burden for future generations. 2014-05 Thesis NonPeerReviewed text en http://psasir.upm.edu.my/id/eprint/66507/1/FEP%202015%2026%20IR.pdf Mok, Wei Mun (2014) Impact of domestic public debt on financial development and economic growth in Malaysia. Masters thesis, Universiti Putra Malaysia.
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 Government interventions through fiscal policy are important to promote growth. In a nutshell, economic growth cannot be developed without government spending. Unfortunately, government tends to borrow from internal and external sources to finance budget deficit when additional government spending is unable to meet the tax revenue. Nowadays, the issue of higher public debt in Malaysia has received an attention from policy makers and economists. Given the abundance of liquidity and ample financial funds in the banking system, Malaysian government can continue borrow and mainly rely on domestic source to close the budgetary gap. Hence, the purpose of this study is to investigate the impact of domestic public debt on financial development and economic growth in Malaysia. The sample period in this study covers the annual time series data from 1980 to 2010. By using Autoregressive Distributed Lag (ARDL) cointegration bound test, this study estimates long run and short run relationship among domestic pblic debt, financial development and economic growth in Malaysia. The empirical finding suggests that outstanding of domestic public debt does crowd out private investment and have a statistically negative impact on financial development during the occurrence of financial crisis. Meanwhile, the ARDL long run coefficient reveals that domestic public debt has an adverse impact on the level of economic growth during the estimate period. In conclusion, government needs to concern over the debt level in order to reduce the debt burden for future generations.
format Thesis
author Mok, Wei Mun
spellingShingle Mok, Wei Mun
Impact of domestic public debt on financial development and economic growth in Malaysia
author_facet Mok, Wei Mun
author_sort Mok, Wei Mun
title Impact of domestic public debt on financial development and economic growth in Malaysia
title_short Impact of domestic public debt on financial development and economic growth in Malaysia
title_full Impact of domestic public debt on financial development and economic growth in Malaysia
title_fullStr Impact of domestic public debt on financial development and economic growth in Malaysia
title_full_unstemmed Impact of domestic public debt on financial development and economic growth in Malaysia
title_sort impact of domestic public debt on financial development and economic growth in malaysia
publishDate 2014
url http://psasir.upm.edu.my/id/eprint/66507/1/FEP%202015%2026%20IR.pdf
http://psasir.upm.edu.my/id/eprint/66507/
_version_ 1643838627574185984
score 13.211869

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