Identifying the factors affecting financial condition of Malaysia

Pang, Yee-Ling and Lee, Hock Ann (2021) Identifying the factors affecting financial condition of Malaysia. International Journal of Business and Society, 22. pp. 403-421. ISSN 1511-6670

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Abstract

This research focuses on the domestic and external determinants of Malaysia’s financial condition, ranging from January 2003 and March 2019. To represent the domestic determinants, a total amount of twelve financial indicators are adopted to compute three indices using the Principal Component Approach (PCA). Three of the indices embody three respective financial segments, particularly the banking system, the foreign exchange market, and the capital market within the Malaysian financial system. These three segments offer a glimpse of the Malaysian financial condition. For the external determinant, the US total assets of all Federal Reserve Banks are adopted as the proxy for the size of the US balance sheet. This research intends to evaluate the validity of the long-run association and its corresponding level of effect between the computed indices and the US balance sheet size via the conduct of the ARDL bounds test approach. The research findings have verified the validity of the long-run association between the Malaysian financial condition and the US balance sheet size. There is a substantial role played by the US balance sheet size in affecting the well-being of Malaysian financial condition, given the statistical significance is shown in the association between the US balance sheet size and the financial-segment-based indices, whereby its strongest influence is found on the banking system condition.

Item Type: Article
Uncontrolled Keywords: Financial condition , Unconventional monetary policy , US balance sheet , Malaysia
Subjects: D World History and History Of Europe, Asia, Africa, Australia, New Zealand, Etc. > DS Asia > DS1-937 History of Asia > DS520-560.72 Southeast Asia > DS591-599 Malaysia. Malay Peninsula. Straits Settlements
H Social Sciences > HG Finance > HG1-9999 Finance
Divisions: FACULTY > Labuan Faculty of International Finance
Depositing User: SAFRUDIN BIN DARUN -
Date Deposited: 21 Aug 2021 14:54
Last Modified: 21 Aug 2021 14:54
URI: http://eprints.ums.edu.my/id/eprint/30267

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