Financial development and economic growth : an empirical evidence from Malaysia
This study examined the relationship between the financial development and economic growth in Malaysia for the period after financial crisis (1997-2004). By using the multivariate cointegration methodology, this study documented the evidence of long run relationships among the economy growth (IPI...
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| Main Author: | |
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| Format: | Thesis |
| Language: | English |
| Published: |
2005
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| Subjects: | |
| Online Access: | http://psasir.upm.edu.my/id/eprint/85024/1/FEP%202005%2014%20IR.pdf |
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| Summary: | This study examined the relationship between the financial development and economic
growth in Malaysia for the period after financial crisis (1997-2004). By using the
multivariate cointegration methodology, this study documented the evidence of long run
relationships among the economy growth (IPI), financial development (TC) and the
interest rate (IR) in Malaysia after the financial crisis. The results of this paper
documented that there is a long run relationship among the three variables after evident
by the Johansen (1998) and Johansen and Johansen and Juselius (1990) cointegration
test. The Vector Error-Correction Model (VECM) was carried out and found that the
economy growth (lPI) is Granger caused financial development (TC) in the case of
Malaysia in this sample period. At the same time, the results also showing another two
single direction causality from financial development to the changes of interest rate and
from changes of interest rate to the economy growth. An interesting finding from this
study is there is bi-direction causality between the financial growth and the interest rate
changes. |
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