Interest Rate Determination and the Effect of Asian Financial Crisis in Malaysia

Mahyudin Bin Ahmad and Mohd Zaini Abd Karim ()

The IUP Journal of Applied Economics, 2011, vol. X, issue 1, pages 37-54

Abstract: : This paper investigates the importance of external factors in the domestic interest rate determination of Malaysia and measures the Malaysian financial market openness and domestic speed of adjustment to changes in foreign factors by capturing the effects of the Asian Financial Crisis in 1997. To achieve the objective, Autoregressive Integrated Moving Average (ARIMA) forecast of the inflation rate and Ordinary Least Square (OLS) regression were estimated using quarterly data for the period 1990:Q3-2005:Q3. Results of the study indicate that external factors were dominant in the domestic interest rate determination in the pre-crisis period. However, in the post-crisis period, domestic variables appear to affect the most. In addition, in post-crisis period, Malaysian domestic market was found to be apparently less open with slower speed of foreign influence.

Date: 2011
References: Add references at CitEc
Citations Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:icf:icfjae:v:10:y:2011:i:1:p:37-54

Access Statistics for this article

More articles in The IUP Journal of Applied Economics from IUP Publications
Series data maintained by G R K Murthy ().