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Is public debt asymmetrically link to financial development in Malaysia?

This study investigates the asymmetric effects of public debt on financial development in Malaysia. Employing time series data for the period of 1980-2015 and nonlinear Autoregressive Distributed Lags framework, this study found that public debt levels are significantly linked to financial developme...

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Main Authors: Liew, Chung Yee, Ismail, Normaz Wana, Tan, Ai Lian
Format: Article
Language:English
Published: Karachi, Pakistan 2020
Online Access:http://psasir.upm.edu.my/id/eprint/89473/1/DEBT.pdf
http://psasir.upm.edu.my/id/eprint/89473/
http://www.aessweb.com/journals/March2020/5004/4915
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spelling my.upm.eprints.894732021-09-02T09:00:40Z http://psasir.upm.edu.my/id/eprint/89473/ Is public debt asymmetrically link to financial development in Malaysia? Liew, Chung Yee Ismail, Normaz Wana Tan, Ai Lian This study investigates the asymmetric effects of public debt on financial development in Malaysia. Employing time series data for the period of 1980-2015 and nonlinear Autoregressive Distributed Lags framework, this study found that public debt levels are significantly linked to financial development in both short-run and long-run. The findings also conclude the existence of asymmetry effects between public debt and the financial development, and higher debt levels discourage financial development. Domestic lenders are major financier of the public debt and if government continue to incur large borrowing domestically, it would likely to crowd-out private sector because of first, it is reducing the availability of credit to private sector; second, banks may prefer to provide credit to government over private sector due to lower risk premium; and third, leads to more expensive borrowing to private sector due to increasing demand for credit from the public sector. Karachi, Pakistan 2020 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/89473/1/DEBT.pdf Liew, Chung Yee and Ismail, Normaz Wana and Tan, Ai Lian (2020) Is public debt asymmetrically link to financial development in Malaysia? Asian Journal of Empirical Research, 10 (3). 97 - 110. ISSN 2306-983X; ESSN: 2224-4425 http://www.aessweb.com/journals/March2020/5004/4915 10.18488/journal.1007/2020.10.3/1007.3.97.110
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 investigates the asymmetric effects of public debt on financial development in Malaysia. Employing time series data for the period of 1980-2015 and nonlinear Autoregressive Distributed Lags framework, this study found that public debt levels are significantly linked to financial development in both short-run and long-run. The findings also conclude the existence of asymmetry effects between public debt and the financial development, and higher debt levels discourage financial development. Domestic lenders are major financier of the public debt and if government continue to incur large borrowing domestically, it would likely to crowd-out private sector because of first, it is reducing the availability of credit to private sector; second, banks may prefer to provide credit to government over private sector due to lower risk premium; and third, leads to more expensive borrowing to private sector due to increasing demand for credit from the public sector.
format Article
author Liew, Chung Yee
Ismail, Normaz Wana
Tan, Ai Lian
spellingShingle Liew, Chung Yee
Ismail, Normaz Wana
Tan, Ai Lian
Is public debt asymmetrically link to financial development in Malaysia?
author_facet Liew, Chung Yee
Ismail, Normaz Wana
Tan, Ai Lian
author_sort Liew, Chung Yee
title Is public debt asymmetrically link to financial development in Malaysia?
title_short Is public debt asymmetrically link to financial development in Malaysia?
title_full Is public debt asymmetrically link to financial development in Malaysia?
title_fullStr Is public debt asymmetrically link to financial development in Malaysia?
title_full_unstemmed Is public debt asymmetrically link to financial development in Malaysia?
title_sort is public debt asymmetrically link to financial development in malaysia?
publisher Karachi, Pakistan
publishDate 2020
url http://psasir.upm.edu.my/id/eprint/89473/1/DEBT.pdf
http://psasir.upm.edu.my/id/eprint/89473/
http://www.aessweb.com/journals/March2020/5004/4915
_version_ 1710677185010860032
score 13.211869

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