Financial structure that contributes towards economic growth of Malaysia in the short-run and long-run

Muhamad Shameer Mohammad Fahmi, (2013) Financial structure that contributes towards economic growth of Malaysia in the short-run and long-run. Masters thesis, University Malaysia Sabah.

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Abstract

The study aims to examine the relationship between the economic growth with bank activity, bank size, market activity, market size, and market efficiency in short-run and long-run. Effort is also taken to determine whether bank-based financial structure is a complement or substitute to market-based financial structure in influencing economic growth. The yearly secondary data ranging from 1980 to 2010 obtained from Bank Negara Reports, Malaysian Financial Report, Department of Statistics Malaysia Report, the Bursa Malaysia Reports and the World Bank Reports are used. The Ordinary Least Square estimation results reveal that Adjusted R-squared is low. However, the estimated Durbin Watson value indicates that the data has an autocorrelation problem. In Unit Root Test results, bank activity, bank size, market activity, and market size have a unit root problem at the level form, but all the variables are found to be integrated at first difference. Next, VAR(p) model determines the optimal lag length of 2. Moreover, co-integration test shows that bank activity, bank size, market activity, market size, and market efficiency are found to be significant in affecting economic growth in long-run. Market efficiency is found to have negative and greater effect on the economic growth while bank size is found to have negative and less effect. Therefore bank based financial structure acts as a substitute to market-based financial structure in affecting economic growth. Finally, the result indicates that there is no short-run relationship between dependent variable and independent variables in the Vector Error Correction model. In conclusion, some recommendations and future study are discussed.

Item Type:Thesis (Masters)
Uncontrolled Keywords:economic growth, Vector Error Correction model, Unit Root Test result, Durbin Watson, Ordinary Least Square, financial structure
Subjects:H Social Sciences > HC Economic History and Conditions
Divisions:SCHOOL > School of Business and Economics
ID Code:8944
Deposited By:IR Admin
Deposited On:06 May 2014 13:54
Last Modified:06 May 2014 13:54

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