Financial development and economic growth in Malaysia: a nonlinear ARDL application

Chia-Guan Keh, Pei-Tha Gan (), Yan-Teng Tan, Fatimah Salwa Binti Abd. Hadi and Norasibah Binti Abdul Jalil

International Journal of Sustainable Economy, 2022, vol. 14, issue 2, 197-215

Abstract: Determining the relationship between financial development and economic growth is important to make precise projections of economic growth. As most of these studies rely on a symmetric relationship, they can lead to misleading policy implications. To overcome this shortcoming, this paper uses a technique involving an asymmetric relationship. This paper examines the asymmetric relationship between financial development and economic growth in Malaysia from 1980 to 2017 using a nonlinear autoregressive distributed lags model. The banking sector and stock market development have been employed as indicators of financial development. The findings suggest that the asymmetric relationship between banking sector development and economic growth exists in the long-run. Banking sector development shows no asymmetric relationship with economic growth in the short-run, while stock market development does not present any asymmetric relationship with economic growth in the short and long-terms. The study infers that the banking sector development is an essential engine of growth promotion. Policymakers should consider banking and stock market development for better policy decision-making.

Keywords: asymmetry; economic growth; financial development; nonlinear ARDL; Malaysia. (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.inderscience.com/link.php?id=122121 (text/html)
Access to full text is restricted to subscribers.

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: https://EconPapers.repec.org/RePEc:ids:ijsuse:v:14:y:2022:i:2:p:197-215

Access Statistics for this article

More articles in International Journal of Sustainable Economy from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().