Predicting Financial Vulnerability in Malaysia : Evidence From the Signals Approach

Kuck, Tai-Hock and Puah, Chin Hong and Mohammad Affendy, Arip (2019) Predicting Financial Vulnerability in Malaysia : Evidence From the Signals Approach. Research in World Economy, 10 (3). pp. 89-98. ISSN 1923-399X

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Abstract

This paper aims to investigate Malaysia’s vulnerability to a financial crisis. The methodology employed is an extension of the signals approach based on the original work of Kaminsky and Reinhart (1999). By studying the period from 2000M1 to 2016M9, we construct a financial vulnerability indicator (FVI) to measure the development of vulnerabilities in the Malaysian financial system. Our empirical findings unveil that the causes of crises are multidimensional. Notably, economic slowdown, decline in stock price and weak exports contain good predictive power in assessing financial vulnerability to a crisis. This study highlights the significance of internal and external macroeconomic conditions in determining a country’s vulnerability.

Item Type: Article
Uncontrolled Keywords: property market, financial crises, vulnerability indicator, signals approach, unimas, university, universiti, Borneo, Malaysia, Sarawak, Kuching, Samarahan, ipta, education, research, Universiti Malaysia Sarawak.
Subjects: H Social Sciences > HB Economic Theory
Divisions: Academic Faculties, Institutes and Centres > Faculty of Economics and Business
Depositing User: Gani
Date Deposited: 02 Sep 2020 07:27
Last Modified: 02 Sep 2020 07:27
URI: http://ir.unimas.my/id/eprint/31524

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