The effects of cost of living and household dependency on household debt and its composition in Malaysia

The effects of cost of living and household dependency on household debt and its composition in Malaysia

The past decade has witnessed a notable increase in household debt across countries, which raises concerns on its impact on social and economic aspects. Although household debt plays an important role in supporting the economy to grow, a continuous rise in the debt level may bring serious economic c...

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Main Author: Hafizah, Hammad Ahmad Khan
Format: Thesis
Language:eng
eng
Published: 2017
Subjects:
HG Finance
Online Access:https://etd.uum.edu.my/7196/1/s96044_01.pdf
https://etd.uum.edu.my/7196/2/s96044_02.pdf
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institution Universiti Utara Malaysia
collection UUM ETD
language eng
eng
advisor Abdullah, Hussin
Samsudin, Shamzaeffa
topic HG Finance
spellingShingle HG Finance
Hafizah, Hammad Ahmad Khan
The effects of cost of living and household dependency on household debt and its composition in Malaysia
description The past decade has witnessed a notable increase in household debt across countries, which raises concerns on its impact on social and economic aspects. Although household debt plays an important role in supporting the economy to grow, a continuous rise in the debt level may bring serious economic consequences. Hence, understanding the potential factors that contribute towards the significant rise in the debt level is useful for policy implications. The main objective of this study was to investigate the effects of the cost of living and household dependency on household debt and its composition in Malaysia where the roles of income level, interest rates and housing prices are the control variables. By using the Autoregressive Distributed Lag (ARDL) modelling approach, this study revealed that in the long run, income level, housing prices and old age dependency have positive influences on both total household debt and mortgage debt while an inverse relationship was observed on the effects of interest rates, cost of living and young age dependency on both types of debt. This finding is also similar to the case of consumer debt except for the role of housing prices which exhibit a negative relationship. This study also discovered that in the event of any short-term deviation in the household debt model the mortgage debt will adjust faster compared to the consumer debt, which may be due to risks associated with mortgage debt which is typically lower since it is secured with assets and thereby any short-term deviation will be easily adjusted. Finally, the inclusion of the structural break in the debt model revealed that the break effects are significant in all the models and thereby support the importance of considering their presence in the analysis to prevent biased estimation.
format Thesis
qualification_name other
qualification_level Doctorate
author Hafizah, Hammad Ahmad Khan
author_facet Hafizah, Hammad Ahmad Khan
author_sort Hafizah, Hammad Ahmad Khan
title The effects of cost of living and household dependency on household debt and its composition in Malaysia
title_short The effects of cost of living and household dependency on household debt and its composition in Malaysia
title_full The effects of cost of living and household dependency on household debt and its composition in Malaysia
title_fullStr The effects of cost of living and household dependency on household debt and its composition in Malaysia
title_full_unstemmed The effects of cost of living and household dependency on household debt and its composition in Malaysia
title_sort effects of cost of living and household dependency on household debt and its composition in malaysia
granting_institution Universiti Utara Malaysia
granting_department School of Economics, Finance & Banking
publishDate 2017
url https://etd.uum.edu.my/7196/1/s96044_01.pdf
https://etd.uum.edu.my/7196/2/s96044_02.pdf
_version_ 1747828171778031616
spelling my-uum-etd.71962021-05-09T03:01:36Z The effects of cost of living and household dependency on household debt and its composition in Malaysia 2017 Hafizah, Hammad Ahmad Khan Abdullah, Hussin Samsudin, Shamzaeffa School of Economics, Finance & Banking School of Economics, Finance and Banking HG Finance The past decade has witnessed a notable increase in household debt across countries, which raises concerns on its impact on social and economic aspects. Although household debt plays an important role in supporting the economy to grow, a continuous rise in the debt level may bring serious economic consequences. Hence, understanding the potential factors that contribute towards the significant rise in the debt level is useful for policy implications. The main objective of this study was to investigate the effects of the cost of living and household dependency on household debt and its composition in Malaysia where the roles of income level, interest rates and housing prices are the control variables. By using the Autoregressive Distributed Lag (ARDL) modelling approach, this study revealed that in the long run, income level, housing prices and old age dependency have positive influences on both total household debt and mortgage debt while an inverse relationship was observed on the effects of interest rates, cost of living and young age dependency on both types of debt. This finding is also similar to the case of consumer debt except for the role of housing prices which exhibit a negative relationship. This study also discovered that in the event of any short-term deviation in the household debt model the mortgage debt will adjust faster compared to the consumer debt, which may be due to risks associated with mortgage debt which is typically lower since it is secured with assets and thereby any short-term deviation will be easily adjusted. Finally, the inclusion of the structural break in the debt model revealed that the break effects are significant in all the models and thereby support the importance of considering their presence in the analysis to prevent biased estimation. 2017 Thesis https://etd.uum.edu.my/7196/ https://etd.uum.edu.my/7196/1/s96044_01.pdf text eng public https://etd.uum.edu.my/7196/2/s96044_02.pdf text eng public other doctoral Universiti Utara Malaysia Abdul Ghani, N. (2010). Household indebtedness and its implications for financial stability in Malaysia. In Household Indebtedness and Its Implications for Financial Stability (pp.67–88). 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