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
Subjects:	Debts Public - Malaysia Economic development - Malaysia Finance
Online Access:	http://psasir.upm.edu.my/id/eprint/66507/1/FEP%202015%2026%20IR.pdf
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id	my-upm-ir.66507
record_format	uketd_dc
spelling	my-upm-ir.665072019-01-24T07:10:59Z Impact of domestic public debt on financial development and economic growth in Malaysia 2014-05 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. Debts, Public - Malaysia Economic development - Malaysia Finance 2014-05 Thesis http://psasir.upm.edu.my/id/eprint/66507/ http://psasir.upm.edu.my/id/eprint/66507/1/FEP%202015%2026%20IR.pdf text en public masters Universiti Putra Malaysia Debts, Public - Malaysia Economic development - Malaysia Finance
institution	Universiti Putra Malaysia
collection	PSAS Institutional Repository
language	English
topic	Debts Public - Malaysia Economic development - Malaysia Finance
spellingShingle	Debts Public - Malaysia Economic development - Malaysia Finance Mok, Wei Mun Impact of domestic public debt on financial development and economic growth in Malaysia
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
qualification_level	Master's degree
author	Mok, Wei Mun
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
granting_institution	Universiti Putra Malaysia
publishDate	2014
url	http://psasir.upm.edu.my/id/eprint/66507/1/FEP%202015%2026%20IR.pdf
_version_	1747812388013342720

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

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