CAPITAL ACCOUNT LIBERALIZATION AND ECONOMIC PERFORMANCE IN MALAYSIA

Siong Hook Law and W.N.w Azman-Saini

The Singapore Economic Review (SER), 2013, vol. 58, issue 03, 1-22

Abstract: This study examines the impact of capital account liberalization on economic growth in Malaysia from 1970 to 2004. It uses two measures of capital account openness, namelyde jure(an index of liberalization) andde facto(the volume of capital flows). The empirical results based on the modified growth model demonstrate that thede juremeasure of capital account liberalization shows an adverse effect on growth in Malaysia. However, thede factomeasure shows a robust positive effect on economic growth. The results also highlight that the effect of capital account liberalization on growth is contingent on a country's level of financial development and the quality of its institutions.

Keywords: Capital account openness; economic growth; institutions; financial development; bounds test; F43; O40 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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DOI: 10.1142/S0217590813500227

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