Financial development and economic growth in Malaysia : the stock market perspective

Chee, Keong Choong and Zulkornain, Yusop and Siong, Hook Law and Liew, Venus Khim Sen (2005) Financial development and economic growth in Malaysia : the stock market perspective. [Working Paper]


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Understanding the causal relationship between financial development and economic growth is important in enhancing the economy of a nation. Using the autoregressive distributed lag (ARDL) bounds test approach, this study finds that stock market development is cointegrated with economic growth in the context of Malaysia. Moreover, this test also suggests that stock market development has a significant positive long-run impact on economic growth. Granger-causality test based on vector error correction model (VECM) further reveals that stock market development Granger-causes economic growth. Hence, this study provides robust empirical evidence in favor of finance-led growth hypothesis for the Malaysian economy.

Item Type: Working Paper
Uncontrolled Keywords: Financial development, economic growth, stock market, bound test, UNIMAS, Universiti Malaysia Sarawak, 2005
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Divisions: Academic Faculties, Institutes and Centres > Faculty of Economics and Business
Faculties, Institutes, Centres > Faculty of Economics and Business
Depositing User: Karen Kornalius
Date Deposited: 05 Dec 2013 02:29
Last Modified: 10 Aug 2020 03:45

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