Research

Wong Sing Yun · Remali Yusoff ·Jurnal Ekonomi Malaysia ·2018

The aim of this paper is to investigate the determinants of the public education expenditure in Malaysia during the period of 35 years from 1982 to 2016. This study intends to address the existing research gaps within Malaysia context that failed to receive much attention in the past. The determinants of education expenditure will be modeled using time series data within the autoregressive distributed lag (ARDL) Bound Testing approach and Error Correction Model (ECM) method. The empirical findings from this study identified the real gross domestic product growth rate (GDP), unemployment rate (UNEM), inflation rate (INF) and working age population (POP2) as the long run determinants of public education expenditure. Findings from the ARDL Bound Testing result further supported the Keynesian CounterCyclical theory as implied by the negative relationship between economic growth and public education expenditure in the long run. The short run analysis through ECM demonstrated that fluctuations in education expenditure was sensitive to the real gross domestic product growth rate (D(GDP)), unemployment rate (D(UNEM)), population of age less than 15 (D(LNPOP1)), and population of age greater than 64 (D(LNPOP3)). This study further recommends that the policy makers to play the role in responding to the economic conditions and demands of the society in their decision-making of the future allocation.

Y. Amjad · N.A.M Naseem · W.N.W. Azman-Saini · Tajul Ariffin Masron · K. Kriskkumar ·Jurnal Ekonomi Malaysia ·2018

Export has been considered as main contributor to economic growth in which also known as export-led growth (ELG) hypothesis. The purpose of this study is to identify the export-led growth nexus in Malaysia. Specifically, this study focuses on disaggregated level of exports such as export of goods and manufactured sectors. By using ARDL co-integration technique for data that covers from 1980 to 2015, the result discovers that exports have positive impact on economic growth, particularly at disaggregated levels of exports namely exports of goods and export of manufactured sectors. This further supports the validation of the export-led growth hypothesis, especially in small, open and dynamic economy like Malaysia. From policy point of view, Malaysia policy makers should give special focus to search for better catalyst of exports promotion strategy to continuously and effectively promote long-term economic growth.

Mohd Shahidan Shaari · Nor Hidayah Harun · Nor Ermawati Hussain ·Jurnal Ekonomi Malaysia ·2019

Economic growth plays an important role in determining the number of female labour force. As economic growth intensifes, the number of female labour force increases simultaneously. However, the rise in the number of female labour force can lead to an increase in the number of child abuse cases. Therefore, this study is essential to explore the relationship between female labour force and child abuse cases in Malaysia. This study employs the ARDL bound testing approach and the results show that a higher number of female labour force can contribute to a higher child abuse case in Malaysia. Therefore, policies on female labour force should be formulated to cushion its effects on child abuse cases.

Malik Cahyadin · Tamat Sarmidi ·Jurnal Ekonomi Malaysia ·2019

The study aims to estimate the impact of Foreign Direct Investment (FDI), labour, and external debt on economic growth in Indonesia and Malaysia over the period 1980-2016. The fndings are expected to serve as a reference for macroeconomic policies in Indonesia and Malaysia. Employing an Autoregressive Distributed Lag Model (ARDL) and Error Correction Model (ECM), we fnd that FDI, labour force and external debt have a signifcant impact on the economic growth in the long- and short- run in both countries. Statistically, the estimated models are stable. Therefore, it is recommended that the authorities in Indonesia and Malaysia should concentrate on attracting more quality FDI infows and properly manage external debts as well as high-skilled labour force, which are vital to economic growth.

Syazwani Kepli · Yasmin Bani · Anitha Rosland · Nisful Laila ·International Journal of Economics and Management ·2021 ·JEL: G21, E44

Financial institutions like commercial banks play important role in the financial system by helping countries to grow and provide capital and platform for investors. However, banks need to be able to generate income in their lending business and perform efficiently. Nonperforming loans (NPLs) is one of the tools to determine the efficiency of lending institutions in which reflect the quality of the credit portfolio as well as the health of the banking sector. High levels of NPLs in the banking system places the banks in risky situation which may lead to limited financial activities and consequently lower investment and growth. Motivated by this scenario, this study examines the determinants of NPLs in the Malaysian banking system. Using annual data from 1988 to 2018, the study estimates the short and long-run dynamics of several determinants using the Auto-Regressive Distribution Lag (ARDL) cointegration approach. The empirical results demonstrate mixed results. In the long-run, exchange rate is positive and significantly related to non-performing loans, while industrial production and money supply are negative and significant. However, inflation does not have significant effect on NPLs in Malaysia. The findings of this study is useful in assisting the banking institutions and policy makers to design macro and fiscal policies.

Abdul Rasheed Sithy Jesmy · Mohd Zaini Abd Karim · Shri Dewi Applanaidu ·Institutions and Economies ·2018 ·JEL: H56; O40; F50

The direct and indirect causes of armed conflict in South Asia is perhaps the single most important reason for increasing military expenditure. It is also a significant threat to the growth of national output in the region. This study examines the impact of conflict on economic growth in conflict-affected South Asian countries from 1980-2014 by employing sufficient determinants, the Solow growth model and Autoregressive Distributed Lag (ARDL) bounds test approach to cointegration. Since military expenditureand military participation have increased simultaneously with internal and external conflict, this study used military expenditure per warring population as a proxy for conflict. Apart from mixed conclusions in the literature, the results of this study suggest that conflict contributes significantly to decreasing per capita GDP in the short-and long-run across South Asia. The findings indicate that the effect is high in the long-run and is most severe in Pakistan, Sri Lanka and India since 85% of conflictin South Asia occurred in these three countries. The study recommends that policymakers and governments should adopt constructive policies to prevent and control internal and external conflicts. Ending conflict undoubtedly leads to minimising the cost of conflict and supports ways of enhancing output in South Asia.

Ke-Chyn Ng · Mui-Yin Chin ·International Journal of Economics and Management ·2021 ·JEL: F14, F31

This study examined the impact of exchange rate fluctuations on the level of international trade between Malaysia and China using 45 observations spanning from 2010 quarter 1 to 2021 quarter 1. The Generalized Autoregressive Conditional Heteroscedasticity (GARCH) model was adopted to compute the exchange rate fluctuations. International trade between Malaysia and China was selected in this study as, since 2009, China has consistently been Malaysia's top trading partner. Besides, to produce precise output, this study employed two models: the export and import models. The empirical results, derived from Autoregressive Distributed Lag (ARDL) modelling, suggested that exchange rate fluctuations had a negative but statistically insignificant impact on exports. In contrast, exchange rate fluctuations had a positive and statistically significant impact on imports. This result implied that importers from Malaysia were generally risk-takers, as they tended to trade significantly during periods of high exchange rate fluctuation. However, to avoid losses for both exporters and importers due to exchange rate fluctuations, policymakers from both countries should ensure that facilities for exchange rate hedging become more convenient and straightforward for traders so that international trade continues to bloom for both countries.

Siong Hook Law · Tamat Sarmidi · Lim Thye Goh ·Malaysian Journal of Economic Studies ·2020 ·JEL: O11, O31, O43

This study empirically investigates the effect of innovation on economic growth using the neoclassical economic growth model. Embarking from the traditional labour growth, physical capital and human capital framework, innovation is postulated to be the main driver for robust economic growth. Using time series techniques, we discover very attention-grabbing findings that highlight the impact of innovation on economic growth for Malaysia. First, the innovation measured by the quantity of a total number of a patent application is statistically insignificant. The result is robust for various innovation measurements, including total local patent application and total foreign patent application. Interestingly, switching to total patent grant instead of a total number of patent application (local or foreign), the empirical result shows a significant impact on economic growth. The finding indirectly reveals the crucial impact of quality innovation rather than the quantity concern. Neglecting both quality and the commercialisation process of these new technologies may not solve the rigidity of knowledge commercialisation paradox. Finally, we test for the prominent institutional quality in mediating economic growth under a knowledge-based economy. The interaction between institutional quality and the total patent grant has significantly accelerated the role of innovation channel to economic growth. The empirical findings imply that inadequacy of innovative technology flow over the long term has a detrimental effect on national innovative capacity. Thus, the innovation-economic growth nexus needs to be complemented with a good institutional quality framework, skilled human capital and broader networking to commercialise the innovative product to ensure that the innovation activities promote economic growth.

J. M. Shukri · Muzafar Shah Habibullah · Roseziahazni Abdul Ghani · M. A. M. Suhaily ·Jurnal Ekonomi Malaysia ·2021 ·JEL: E43, E52, F31, F32, F33, F41

The aim of this paper is to estimate the equilibrium of exchange rates and identify the roles of macroeconomics fundamentals affecting exchange rates using Malaysian data spanning 1970 to 2019. This study adopts the Autoregressive Distributed Lag model to examine the long-run relationships or cointegration among variables and the dynamic effect within variables in the short-run over the sample period. The results suggest that inflation rate and national income growth rate play important roles in influencing exchange rate movement. The results also reveal that the misalignment of exchange rates is quite small and stable during 1988 to 2019, except for 2015 which was attributed to the weaker growth in China. Consecutively, this study suggests that the parity condition is only important in the long-run in explaining exchange rates behaviour for the sample country.

Nur Farah Zafirah Zulkiflee · Nurbaizura Borhan · Mohd Fikri Hadrawi ·Pertanika Journal of Social Science and Humanities ·2022

An increase in the crime rate may jeopardize a country’s development and economic growth. Thus, understanding the relationship between crime and a few determinants is crucial in sustaining the economic growth in Malaysia. The four determinants used in this research are economic growth, population, education level, and inflation rate. The data covers the period from 1984 to 2019, and Autoregressive Distributed Lag (ARDL) modeling approaches were used in this research. The findings showed that only the population has a significant positive impact on crime rates for long-term and short-term relationships. Meanwhile, economic growth and education level have a significant long-term positive effect on the crime rate. On the other hand, the inflation rate did not significantly impact the crime rate in long-term and short-term relationships. Interestingly, it was found in the findings that the crime rate and population showed a bidirectional causal relationship indicating that the past population values are useful for a better prediction of the current crime rate and vice versa. Thus, the Malaysian government should encourage people to cooperate with the enforcement authorities to deter crime for future environmental safety effectively.

Norlin Khalid · Hakimah Nur Ahmad Hamidi · Sharmila Thinagar · Nur Fakhzan Marwan (Universiti Teknologi MARA (UiTM) Kedah) ·Jurnal Ekonomi Malaysia ·2018

This paper aims to forecast the performance of crude palm oil price (CPO) in Malaysia by comparing several econometric forecasting techniques, namely Autoregressive Distributed Lag (ARDL), Autoregressive Integrated Moving Average (ARIMA) and Autoregressive Integrated Moving Average with exogenous inputs (ARIMAX). Using monthly time series data spanning from 2008 to 2017, the main results revealed that ARIMAX model is the most accurate and the most efficient model as compared to ARDL and ARIMA in forecasting the crude palm oil price. The results also show that the spot price of palm oil is highly influenced by stock of palm oil, crude petroleum oil price and soybean oil price. The empirical findings provide some insights for decision making and policy implementations, including the formulation of strategies to help the industry in dealing with the price changes and thus enable the Malaysian palm oil industry to continue dominating the international market.

Asma Rashidah Idris · Muzafar Shah Habibullah · Badariah Haji Din ·Jurnal Ekonomi Malaysia ·2018

The “old-age security” and “complete substitutability” hypotheses suggest that fnancial market can affect individuals’ decision to have less or more children. It has been recognised in the literature that at low level of fnancial development, children are considered an asset and a form of investment that could provide returns and security during old age. However, at higher level of fnancial development, individuals have more access to the fnancial market that can provide funds and fnancing during old age and as a result the demand for children is less. Furthermore, increase in female labour participation rate in the fnancial industry as well as in other economic sectors will also induce demand for fewer children. In Malaysia, the development of banks as well as the non-banking fnancial institutions has broadened credit accessibility to households and it could affects household’s decisions over the number of children they should have. Thus, the present paper empirically investigates the long-run relationship between fertility rate, fnancial development, income and household consumption in Malaysia for the period 1975 to 2013. In this study we employed the autoregressive distributed lag (ARDL) modelling approach for the testing of cointegration. Our results suggest that fnancial development and household consumption expenditure are negatively related to fertility rate, while fertility rate portrays a non-linear long-run relationship with income, thus exhibiting an inverted U-shaped curve with income in Malaysia.

Siew-Pong Cheah · Lin-Sea Lau · Chee-Keong Choong ·International Journal of Economics and Management ·2021 ·JEL: D3, D63, G51

Most past studies have assumed a symmetric relationship between income distribution and household indebtedness. Therefore, linear or symmetric modelling would miss possible asymmetric relationships between income distribution and household debt, resulting in misleading conclusions and policy suggestions. Thus, this study has explored the potential asymmetries between household debt and income inequality within long-run and short-run relationships. This study discovered that the association between income inequality and household debt was asymmetric in the long and short run using the nonlinear autoregressive distributed lag model. The results showed that only decreases in income inequality had a significant and positive effect on household debt, while increases in income inequality did not have a significant effect. The findings emphasised the need for policies to reduce income inequality to lessen debt among Malaysian households.

Izaan Jamil · Mori Kogid · Thien Sang Lim · Jaratin Lily ·Economies ·2022

This paper investigates the impact of soybean and crude oil futures on palm oil indexes by utilising monthly data from three palm oil indexes listed in Bursa Malaysia, i.e., the Asian palm index, Malaysian palm index, and Plantation index, spanning from January 2010 to June 2020. The impacts were analysed using the Autoregressive Distributed Lag (ARDL) bounds test approach and causality test. The statistical findings revealed that the Asian palm index has a long-run relationship with crude oil futures and crude palm oil, and a short-run relationship with soybean futures, crude oil futures, and crude palm oil. On the other hand, the Malaysian palm index has a short-run relationship with soybean futures and crude palm oil, whereas the Plantation index has a short-run relationship with crude oil futures, crude palm oil, and exchange rate. For the long-run strategy, this study recommends close monitoring of crude oil futures. Meanwhile, the short-run strategy requires close monitoring of the crude oil and soybean futures. Eventually, the empirical findings proposed that interested parties such as fund managers, investors, and traders should pay attention to crude oil and soybean futures to mitigate risk and diversify their portfolios with greater emphasis on crude oil futures.

Chia-Guan Keh · Pei-Tha Gan · Yan-Teng Tan · Fatimah Salwa Binti Abd. Hadi · Norasibah Binti Abdul Jalil ·International Journal of Sustainable Economy ·2022

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.